- Stock falls 6.5% pre-market
- Revenue, profits, margins all down
- Patience wearing thin for investors
Elon Musk’s ability to rally investors behind Tesla (TSLA:NASDAQ) is becoming increasingly ineffective at a crucial point. Tesla is attempting to switch from an EV leader into an AI and robotics champion but for the talk of self-driving cars (robotaxi) and humanoid robots (Optimus), the company still makes its money selling cars and carbon credits.
Tesla is hurting. Following a largely disappointing after-hours quarterly earnings update, shares in the business fell sharply, with pre-market data pointing to a 6.5% decline to $310.
DECLINES ACROSS THE BOARD
Automotive revenues fell 16% while adjusted earnings were down 23%. EPS (earnings per share) at $0.40 missed expectations for around $0.42.
Gross margin held up a touch better than expected at 17.2% versus a 16.5% forecast, but still down from 18% a year ago. We knew the automotive business was going to be tough, but Musk’s warning that Tesla could be in for ‘a few rough quarters’ was unusually downbeat from the stock’s cheerleader-in-chief.
‘Competition is fierce, tariffs are biting, the end of tax credits for EV buyers in the US could hurt, Elon Musk’s political escapades have been a turn-off for many people, and product innovation has failed to make waves’, wrote AJ Bell’s investment director Russ Mould.
PATIENCE WEARING THIN
So far, investors have been willing to give Musk and Tesla the benefit of the doubt, largely sticking with the stock and its promises of jam tomorrow. But the stock needs new interest to drive it higher and there’s little to seed renewed appetite in the near-term.
For how long markets will allow the status quo to continue is the question, and as Shares recently pointed out, boardroom crunch time may be rapidly approaching.
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Steven Frazer) and the editor (James Crux) own shares in AJ Bell.
