Tesla Shares Drop After CEO Elon Musk Expresses Pessimism

Tesla shares experienced a decrease of over 15% in the past few days, closing the week at $211.99. The drop came after CEO Elon Musk expressed concerns about macroeconomic issues during a third-quarter earnings call on Wednesday.

This decline marks the worst week for Tesla stock this year. However, despite the recent drop, shares of the electric automaker have still risen by 96% year-to-date.

Financial Performance and Projections

For the period ending September 30, 2023, Tesla reported $23.35 billion in revenue and $1.85 billion in profits. These figures represent a decline compared to the previous quarter and the same quarter last year.

During the earnings call, Musk emphasized the importance of cost-cutting and price reductions for Tesla in the coming quarters. He expressed a deeply pessimistic view of the economy and tempered expectations for the long-delayed Cybertruck, declining to provide specific details about the company’s autonomous vehicle technology.

Challenges and Concerns

Musk admitted that Tesla is lagging behind competitors such as Cruise and Waymo in the development of robotaxi technology. He also acknowledged that manufacturing the Cybertruck at an affordable price is proving to be a significant challenge.

Tesla plans to officially debut the Cybertruck on November 30, but final specifications and pricing have not been disclosed. It remains uncertain how many of the individuals who made a $100 refundable reservation for the Cybertruck will actually follow through with purchasing the vehicles.

Focus on Cost Reduction

Musk repeatedly stressed the need to reduce costs internally and for customers. He expressed concern about the current high-interest rate environment, stating that it makes it difficult for people to afford Tesla’s vehicles. The new CFO, Vaibhav Taneja, echoed these concerns and emphasized that reducing vehicle costs is the company’s top priority.

Mixed Market Response

Musk’s long-term vision statements did not have the same positive impact on the market as they have in the past. Even analysts who are typically bullish on Tesla issued cautious notes following the Q3 results. Some expressed doubt about the company’s ability to maintain growth and profitability, while others highlighted the long-term potential of Tesla’s products and services.

Some investors and analysts see Tesla’s Q3 results as a signal of a challenging outlook for electric vehicles (EVs) in general. Chinese EV makers and other automakers also saw a decline in their shares following Tesla’s cautious earnings call.

Overall, Tesla faces various challenges and uncertainties, but its long-term believers still see potential in the company’s products and services.