Tesla’s Share Price Plummets 8% After Missing Q2 Profit Estimates
In a surprising turn of events, Tesla’s share price fell 8% in extended trading after the electric vehicle maker reported lower-than-expected net profit in the second quarter. This news comes as a shock to investors, as Tesla has been a market leader in the EV industry.
According to reports, Tesla’s net income for the second quarter declined to $1.48 billion from $2.70 billion a year ago. This drop in profit was attributed to price cuts to boost demand and increased spending on AI projects. The company’s adjusted earnings of 52 cents per share also missed Wall Street estimates of 62 cents.
Tesla CEO Elon Musk addressed the disappointing results in a conference call with investors, acknowledging that new competitors have been offering substantial discounts on their EVs, making it more challenging for Tesla to compete. Musk also mentioned that the company had to lay off more than 10% of its employees to cut costs.
Despite the setback, Tesla reported a revenue of $25.50 billion for the quarter, slightly exceeding analyst expectations. However, the company’s automotive gross margin excluding regulatory credits was lower than anticipated at 14.6%.
In a bid to stay ahead in the market, Tesla announced a delay in the unveiling of its Robotaxi product to October 10. The company stated that they needed more time to make important changes to the robotaxi before its launch. Musk also expressed confidence in winning regulatory approval for Tesla’s “supervised” Full Self-Driving software in China and Europe by the end of the year.
Overall, Tesla’s share price has eased 0.8% year-to-date, but the stock has seen a significant rally of over 30% since shareholders approved Musk’s $56 billion pay package in June. The company remains optimistic about a sequential increase in production in the third quarter.
With Tesla facing challenges from competitors and regulatory hurdles, investors are eagerly watching to see how the company will navigate these obstacles and maintain its position as a leader in the EV market.
