(BFM Bourse) – The specialist in electric vehicles has published results below expectations and its CEO has taken a scarcely engaging tone during the conference with analysts. The stock is collapsing on Wall Street.
Tesla is under high pressure on Wall Street. The stock of the electric vehicle specialist plunges 8.7% to $221.36 at the beginning of the session, a decrease that wipes out between $70 and $80 billion of market capitalization for the group.
The market is punishing the company’s third quarter results and the discouraging comments made by Elon Musk during the following conference.
During the period from July to September, Tesla generated revenues of $23.35 billion, up 9%, an unusually low growth for the company.
However, this is not such a big surprise since the automaker’s deliveries slowed down in the third quarter to 435,059 units, a decrease from the previous quarter (466,000) and an increase of “only” 26% compared to the same period in 2022. It should be noted that Tesla normally shows a growth in deliveries of 30% to 50% on an annual basis.
The modernization of production sites has caused downtime in the factories, which has weighed on production and therefore on deliveries.
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A margin not far from Renault’s
The group, which has repeatedly reduced prices for its models in Europe, the United States and China this year, has logically seen its operating margin collapse. This margin went from 17.2% in the third quarter of 2022 to 7.6% a year later, a profitability comparable to Renault’s (the diamond group expects a margin between 7% and 8% this year).
Earnings per share stood at 66 cents, down 37%, while free cash flow reached 850 million euros.
According to a consensus cited by Bank of America, Tesla disappointed on all fronts, with analysts expecting earnings per share of 74 cents, revenues of $23.92 billion, and cash flow of $2.4 billion, much more than the actual cash generated by the company.
Tesla confirmed its medium-term target of achieving an average annual growth rate of 50% in its deliveries, and reiterated its target for this year of 1.8 million vehicles.
A conference that was a “mini-catastrophe”
But these rather disappointing results are not the only reason why investors are selling the stock. In fact, when Tesla released its earnings on Wednesday night, the stock was slightly up in after-hours trading, before turning around during the conference with analysts organized by management, with CEO Elon Musk.
“In summary, we would describe last night’s conference call as a ‘mini-catastrophe’, as the markets wanted information on the decline in margins and the constant price reductions seen worldwide, but instead they heard a much more cautious Musk” on the economic situation, explains Dan Ives, analyst at Wedbush on X (formerly Twitter).
“Elon Musk spent a lot of time on the macroeconomic environment and the effects of current interest rates,” observes Bank of America. “Given these risks, Tesla is slowing down plans to build the next manufacturing plant in Mexico,” the institution added.
This is confirmed by Reuters, the agency reporting that the executive has strongly emphasized the impact of interest rates, fearing that these high rates will prevent potential customers from buying its cars, even though prices are lower.
The Cybertruck will take time to take off
“People hesitate to buy a new car if the economy is uncertain,” Elon Musk said during the conference with analysts, during which he also mentioned the pressures faced by American workers “from paycheck to paycheck”. “I don’t want to move too fast in uncertainty,” he added.
Another important point: Tesla announced that the first delivery of the Cybertruck, a kind of pickup truck with a polygonal design and angular lines (reminiscent of racing video games from the early days of 3D on consoles), will take place on November 30.
“Management provided more details on the production plan for the Cybertruck, which is expected to reach the desired operating volume (250,000 units) and profitability in 2025,” notes Bank of America.
Julien Marion – ©2023 BFM Bourse
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