Tesla's stock dropped on Thursday following the release of the electric automaker's disappointing third-quarter figures. Elon Musk, the CEO, gave a downbeat assessment of the world economy during the meeting with shareholders, resulting in some analysts expressing concerns.
Shares of Tesla plummeted by more than 9% on Thursday, a day after the electric automaker revealed third-quarter results that fell short of both its top and bottom line Wall Street estimates. This was the first time Tesla failed to meet earnings and revenue expectations since the second quarter of 2019. During the company's quarterly call with investors, CEO Elon Musk voiced concerns about the global economy, citing the effect of high interest rates on consumers' ability to buy cars. Musk also informed shareholders that Tesla would be reducing the cost of its vehicles before they begin constructing a new factory in Mexico on a large-scale. Bank of America reaffirmed its neutral rating on the stock and slashed Tesla's projections for the fourth quarter and the years ahead due to a "lower gross margin profile". In addition, analysts from Morgan Stanley were surprised by the amount of time Musk devoted to the global economy. They also suggested that, although it's reasonable to worry about interest rates, it is unclear whether Tesla's caution was predominantly due to increased competition or weakening demand. On top of this, Musk mentioned that he would "temper expectations" for the much-anticipated Cybertruck and warned that it would be a while before it starts to generate “significant positive cash flow”. This commentary was enough to raise doubts for Deutsche Bank analysts, who said that the third-quarter earnings miss and the cautionary outlook for vehicle demand, 2024 growth, slow and costly launch of Cybertruck, and uncertain timeline of next-gen platform, has reinforced their concerns regarding Tesla's fundamentals heading into next year.
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