Tesla shares take an 8% dent after Q3 disappointment
Adjusted earnings came in at 66c per share, short of the 73c expected and down from $1.05 in the same quarter last year.
Revenue rose 9%, but at $23.35 billion it was still below estimates of $24.1bln and marks the slowest pace of growth in more than three years. Tesla's aggressive price cuts this year have battered its gross margin, particularly in China where it faces stiff competition from local automakers. Gross margin dropped to 17.9% in the quarter, compared with 25.1% a year earlier, when it had yet to start cutting prices.
(AI Video Transcript)
Tesla shares
Tesla's stock took a big hit last night, dropping more than 8 percent in after-hours trading. The company's earnings per share came in at 66 cents, lower than expected and a huge drop from last year's 105 cents. While the revenue increased by 9 percent to 23.35 billion, it still fell short of the estimated 24.1 billion. This is not great news for Tesla, as it represents their slowest growth rate in over three years.
Elon Musk
One of the reasons for Tesla's decline is the tough competition they are facing from Chinese automakers. In an effort to compete with cheap Chinese exports, CEO Elon Musk had to make price cuts, which have taken a toll on Tesla's profitability. The company's gross margin dropped from 25.1 percent to 17.9 percent this past quarter due to these price cuts. Musk also expressed concerns about high interest rates affecting car buyers and questioned the company's plans for a factory in Mexico.
Tesla's resilience to economic downturns
This change in tone from Musk is significant, as he had previously claimed that Tesla was resilient to economic downturns. The drop in Tesla's share price was quite significant and reached levels not seen since the end of August.
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