Tesla Group posted its biggest daily drop in more than three months Thursday after reporting quarterly results in line with analyst expectations, but adding to Wall Street’s concerns about the ability of the Elon Musk-led electric car maker. Meet high profit expectations.
Highlights
- Although the company’s revenue and earnings per share for the first three months of 2023 were in line with expectations, the report included enough evidence of a potential financial situation for concern, with Tesla reporting an 80% drop in free cash flow year-over-year and an operating margin drop of 2.0%. 41% year over year.
- Tesla shares lost 9.8 percent in trading on Thursday, its worst day since January 3, wiping out $51 billion (45.9 billion euros) from the market value.
- This figure exceeds the $47 billion (€42 billion) market capitalization of Ford and General Motors, Tesla’s largest US competitor.
- Tesla’s market capitalization, at $511 billion (€460 billion), is still about ten times higher than that of Ford and General Motors.
- It was a “disappointing” quarter for Tesla, Bernstein analyst Tony Sacconaghi wrote in a note to clients Thursday. He cut his estimate for Tesla’s full-year earnings by more than 20% and maintained a price target of $150, which would imply a 17% drop in Tesla’s share price at the close of the market on Wednesday.
- Sacconaghi explained that Tesla, which has just cut prices for its cars for the sixth time this year, is “undermining” its profitability and will find it “very difficult” for it to maintain a price advantage in a “very competitive” car market.
Interesting quote
“Margins are now a tough issue keeping Tesla investors awake,” Wedbush analyst Dan Ives wrote Thursday, lowering his price target for the stock from $225 to $215.
contra
Elon Musk shrugged off margin concerns, saying on an earnings conference call on Wednesday that “choosing a bigger size and a bigger fleet is the right choice for the bigger one. Complete independence.”
main context
Tesla investors have seen a boom over the past three years, with the stock jumping more than 600% between the beginning of 2020 and the end of 2021 before crashing more than 75% at the end of 2022. Tesla delivered a record 423,000 cars in the most recent quarter. Thursday marks the last huge move in Tesla stock after the earnings release. Stocks gained or lost an average of about 6% the day after the last 10 earnings reports.
A large number
11.4 billion dollars (10.3 billion euros). That’s how much Elon Musk’s net worth fell on Thursday, and it’s the largest daily drop of any billionaire, according to our estimates. His fortune is $174 billion (€157 billion), about $65 billion (€58.5 billion) less than the world’s richest man, Bernard Arnault, head of LVMH, but about $50 billion (€45 billion) more than Jeff Bezos, the second richest american
Translated article from the American magazine Forbes – Author: Derek Saul
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