Tesla tumbles as Wall St raises doubt over growth outlook


FILE PHOTO: The logo of car manufacturer Tesla is seen at a dealership in London, Britain, May 14, 2021. REUTERS/Matthew Childs/File Photo

TESLA tumbled 5% on Thursday as Wall Street analysts questioned its ability to maintain the runaway growth that has for years set the electric-vehicle maker apart from other automakers.

CEO Elon Musk, who had called Tesla "recession-resilient" last year, said on Wednesday he was worried about the impact of high interest rates on demand after the company missed revenue estimates by the most in three years despite hefty price cuts.

The change of tone from one of the most prominent auto executives fanned fears about the outlook for the EV industry and was set to erase nearly $40 billion from the market capitalization of Tesla, the most valuable automaker.

"It didn't have the same zip. We await Tesla's earnings calls with a sense of excitement and suspense - and they usually deliver. Not Wednesday night," Canaccord Genuity analysts said.

The company is expected to cut prices further in the current quarter to meet its annual deliveries goal of 1.8 million vehicles, even after its gross margin contracted to 17.9% between July and September from 25.1% a year earlier.

"Tesla's auto business is a legacy business now," Chaim Siegel of Elazar Advisors said.

The ramp up of "Blade Runner"-inspired Cybertruck will also pressure profitability in the coming months, likely offsetting the boost from easing commodity prices.

Overall, seven analysts cut their price targets on the stock, pushing the median view to $260, according to LSEG data.

Tesla shares were at $229 in premarket trading. The stock has nearly doubled in 2023 on investor optimism that the company will fare better than rivals in an uncertain economy and see a long-term boost from its self-driving efforts.

Cash crunches at small EV startups and the ongoing strike at the Detroit Three automakers have also added to the optimism around Tesla.

Tesla trades at about 59 times its 12-month forward earnings estimates, compared with 6.3 times for Ford and General Motors' 4.2. - Reuters

Follow us on our official WhatsApp channel for breaking news alerts and key updates!

Tesla , auto , Wall Street , Elon Musk

   

Next In Business News

Toyota likely to post first profit drop in two years
Strong financial grasp critical for investors
Licence freeze to have impact on Xin Hwa
Gagasan Nadi in RM185mil acquisition
Proton October sales climb 13.6% to 12,799 units
Aneka Jaringan wins RM39mil job
TCS bags RM86mil contract
The Philippines to be cautious in policy easing cycle
Ringgit maintains stronger footing at the close
Zetrix platform set to spur MyEG’s earnings

Others Also Read