Tesla's shares took a sharp dive, marking their steepest decline since January, after the electric vehicle giant reported quarterly earnings that fell short of expectations and another drop in automotive revenue.
By late Wednesday morning, Tesla's stock had plummeted 11% to $219.58, contributing to a 12% loss for the year, while the Nasdaq has climbed 17% over the same period.
On Tuesday, Tesla revealed a 7% year-over-year decline in auto revenue, totaling $19.9 billion, alongside shrinking margins. Despite a 2% increase in total revenue to $25.5 billion, these figures weren't enough to satisfy investors.
The company has been slashing prices globally and offering discounts to counter slowing sales and rising competition, particularly in the Chinese market. While Tesla remains the dominant seller of electric vehicles in the U.S., it's losing market share to a growing number of competitors, partly due to its aging lineup of sedans and SUVs and the polarizing nature of CEO Elon Musk's public statements.
Adjusted earnings for the second quarter were 52 cents per share, missing the average analyst estimate of 62 cents. Additionally, Tesla's adjusted operating margin shrank to 14.4%, the lowest in three years, down from 18.7% a year earlier. This marks the fourth consecutive quarter of declining margins.
Investors are eagerly awaiting the introduction of a new mass-market car to refresh Tesla's vehicle lineup. Musk assured on the earnings call that a new "affordable" car is on track for delivery in the first half of next year.
Robotaxis were a major topic during the earnings call. Musk envisions a future where Tesla owners can allow their vehicles to participate in an Uber-like ride-hailing service, operating autonomously. He expressed confidence, saying, "I would be shocked if we cannot do it next year," regarding the first robotaxi ride.
However, Musk has a history of setting ambitious timelines and not meeting them. On Tuesday, he postponed Tesla's robotaxi event to October, after initially scheduling it for August. Musk cited a desire to make significant improvements to the vehicle, though he did not provide specifics.
Tesla's recent performance underscores the challenges the company faces in maintaining its market leadership amid intensifying competition and evolving consumer expectations. Investors will be closely watching Tesla's next moves, especially regarding new vehicle introductions and advancements in autonomous driving technology.
