Tesla’s Stock Price Plummets Despite Surpassing Expectations
The stock price of Tesla Inc (NASDAQ: TSLA) took a significant hit, declining by almost 10% during Thursday’s trading session to close at US$262.90. Unfortunately, the downward trend continued after hours, with a further 1% drop to US$260.60. The surprising decrease in value comes as Tesla managed to surpass expectations with its quarterly update earlier this week.
Initially, the market responded positively to Tesla’s second-quarter update, which highlighted record-breaking quarterly revenue. However, as analysts delved deeper into the results and engaged with management, optimism began to wane.
Concerns are primarily centered around Tesla’s margins, which have suffered due to a period of discounting. In fact, the company’s profit margin for the quarter dropped to 9.6%, its lowest level in five quarters. Goldman Sachs forecasts continued margin challenges unless Tesla adjusts prices to support higher volumes.
Tesla’s CEO, Elon Musk, seemingly undeterred by these concerns, encourages investors to focus on the bigger picture. He emphasizes that short-term differences in gross margin and profitability are relatively inconsequential compared to the long-term outlook. Musk believes that advancements in autonomy technology will render these figures insignificant.
Furthermore, apprehension lingers regarding Tesla’s diminishing backlog of deliveries. Troy Teslike, a prominent tracker of Tesla orders, posted a troubling chart on Twitter displaying the dwindling estimated backlog orders.
Investors may interpret this as a sign that, despite significant price reductions, Tesla might encounter substantial obstacles in securing future sales.
In conclusion, despite surpassing expectations in terms of revenue, Tesla’s stock price experienced a downturn due to concerns surrounding margins and declining delivery backlog. Though Elon Musk remains optimistic about Tesla’s long-term prospects, market sentiment appears cautious. Investors eagerly await further updates and improvements from the electric vehicle giant.
