Tesla Stock Drops 7% Amidst Production Concerns and Upcoming Earnings Report
Translated & summarized from Bizportal by baba
Tesla's stock fell 7.3% last week, reaching a three-week low, and is down 21% year-to-date. The company is set to release its third-quarter earnings on Wednesday, with analysts watching production numbers and operating profit closely. Deliveries in Q3 were 486,500 vehicles, a slight increase from Q2 but down from last year, while production lagged. The company has also invested heavily in AI and autonomous driving initiatives.
The story in 7 lines · by baba
- Tesla's stock dropped 7.3% last week, closing at $354.7, its lowest in three weeks.
- The stock is down 21% year-to-date and 28% from its December peak.
- Tesla will release its third-quarter earnings report on Wednesday after market close.
- Third-quarter vehicle deliveries were 486,500, a 1.3% increase from Q2 but a 2% decrease year-over-year.
- Production in Q3 was 464,000 vehicles, falling short of deliveries.
- Energy storage systems installed reached 13.7 GWh, up from the previous year.
- Tesla invested $2 billion in Elon Musk's AI company xAI, converting it to SpaceX shares.
Tesla's stock experienced a significant decline, falling approximately 7.3% last week to close at $354.7, its lowest point in three weeks. Year-to-date, the stock has dropped about 21%, and it's down roughly 28% from its mid-December peak of nearly $490. This downturn occurred even as the Nasdaq index rose about 12.5% during the same period. The unveiling of the new Roadster, developed with SpaceX, failed to reverse the trend, with the stock dropping 1.3% on launch day and an additional 2.1% the following day on high trading volume.
In the third quarter, Tesla delivered approximately 486,500 vehicles, a slight 1.3% increase from the second quarter but a 2% decrease from the 497,000 delivered in the same quarter last year. Production lagged behind deliveries, with about 464,000 vehicles manufactured, leading to a reduction in inventory. Meanwhile, Tesla installed 13.7 gigawatt-hours of energy storage systems, up from 12.5 gigawatt-hours in the prior year's quarter.
Looking at the second quarter's financial performance, Tesla's revenue increased by about 26% year-over-year to $28.2 billion, but operating profit fell to $398 million, less than half of the previous year's $923 million. The operating margin narrowed to 1.4%, and the gross margin was 16.8%. Research and development expenses reached $2.37 billion, with stock-based compensation expenses rising 80% in the first half of the year. Revenue from regulatory credits sold to other automakers decreased to $146 million from $439 million a year earlier, while service revenue, including used car sales and charging, jumped 50% to $4.6 billion, and energy storage revenue rose 13% to $3.1 billion.
Tesla invested $2 billion in Elon Musk's AI company xAI, which was converted into SpaceX shares, resulting in a less than 1% holding. This investment generated an unrealized gain of about $1 billion in the first half of the year. The company also reported $318 million in Megapack system sales to SpaceX in the second quarter, with total sales to related parties amounting to $405 million in the first half. Tesla spent $8.3 billion on capital expenditures in the first half, more than double the previous year, and had a negative free cash flow of $1.1 billion in the second quarter, with funds directed towards AI, autonomous driving, and robotics.
Tesla is scheduled to release its third-quarter earnings report on Wednesday after market close, alongside Meta and IBM. Investors will be scrutinizing the operating profit figures, comparing them to previous quarters and the same period last year. The company has also secured $30 billion in credit lines as of late September. The stock's fluctuations impact Israeli investors through various funds, with the dollar-shekel exchange rate also affecting returns in local currency.