Investors Pump the Brakes on Tesla Amid Production and Margin Woes


Simpler Trading Team

Jul 20th 2023  .  2 min read

In a surprise turn of events, shares of the automotive titan, Tesla, plummeted by over 10% on Thursday. The drop was sparked by ambiguous remarks made by CEO Elon Musk and other top brass during the earnings call, casting doubt over the production pace for the coming third quarter and raising concerns about the impending release of the company’s much-anticipated Cybertruck and planned robotaxi-ready vehicle.

Despite reporting robust earnings that surpassed expectations, Tesla’s top management hinted at potential production slowdowns during the upcoming quarter owing to factory improvements, leading to heightened uncertainty among investors. The company aims to reach a target of 1.8 million vehicle deliveries for this year, although Q3 output may see a dip due to planned factory shutdowns for upgrades, as expressed by Musk.

The company’s new Cybertruck, designed by Musk and Franz von Holzhausen, had its grand reveal at a factory inauguration in Austin, Texas. However, Musk’s vague commentary concerning the Cybertruck’s delivery volumes and production timeline has stirred up a cloud of ambiguity, pushing down investor sentiment and impacting the stock’s performance negatively.

Adding to these concerns, financial analysts highlighted troubling signs on Tesla’s margin front. At 9.6%, the company’s profit margin was the lowest it has been in the last five quarters. Tesla may continue to face these margin headwinds in the intermediate term if the company chooses to lower prices to support higher sales volumes, according to Mark Delaney of Goldman Sachs.

Despite the stock’s substantial dip, the electric vehicle giant reported positive earnings for the quarter that ended June 30, 2023, with revenue hitting $24.93 billion and adjusted earnings landing at 91 cents per share. These figures are slightly offset by the vague statements concerning Cybertruck production, leaving investors and enthusiasts alike awaiting further clarity.

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