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- Tesla shares plummet after company reports falling profits (newsbreak.com)
Tesla’s stock dropped 12% early on Wednesday after an earnings report revealed declining profits due to increased competition and weak sales.
The report underperformed against Wall Street’s profit expectations.
Tesla CEO Elon Musk explained to analysts that substantial discounts from competitors in the electric vehicle (EV) market have complicated Tesla’s sales efforts.
After initially falling over 25% at the start of 2024, Tesla’s stock had rebounded from those losses this month following a positive vehicle delivery report. However, Wednesday’s decrease brought the stock to its lowest point in over three weeks.
The earnings released on Tuesday showed the second successive quarter of profit decline. A significant portion of the company’s earnings, amounting to $890 million this quarter, came from government credits, representing more than half of Tesla’s profits.
Gordon Johnson, the CEO and founder of GLJ Research and known for his bearish stance on Tesla, commented that the reliance on government credits is masking weaknesses in Tesla’s primary business of vehicle sales.
Johnson, during an interview with ABC News, indicated that the actual business performance might be even worse than the earnings suggest.
Critics argue that Tesla’s vehicle demand is falling due to the lack of new, affordable models and a general slowdown in the EV market. Analysts believe Tesla’s path to regaining its rapid growth rate is challenging, given the increasing market competition.
Nevertheless, supporters point to Tesla’s history of significant innovation in the industry, suggesting upcoming EV models and advances in autonomous driving technology could propel the company forward.
Wedbush investment firm’s managing director Dan Ives, remains optimistic about Tesla, focusing on future opportunities with autonomous vehicles, including Robotaxis and AI technologies.
Ives commented that he did not anticipate significant advancements this quarter from Tesla but foresees significant growth through innovations in autonomous and AI technologies that are nearly ready to launch.
Musk reported substantial progress in the company’s full self-driving software in the recent quarter, expecting significant improvements in its functionality that customers will soon notice.
However, Tesla has faced some hurdles with its self-driving technology, prompting recalls of nearly 2.4 million vehicles over safety and crash risks since December. Furthermore, the launch of Tesla’s Robotaxi service has been postponed until October.
Despite these developments, Johnson remains skeptical about the viability of the Robotaxi project, noting that Tesla has yet to deploy any such vehicles on the road.
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- Tesla shares plummet after company reports falling profits (newsbreak.com)