Tesla shares drop after third-quarter profit falls short of estimates
Investing.com - Tesla shares sank by more than 3% in extended hours trading after the electric vehicle giant posted quarterly earnings that fell short of Wall Street estimates, as rising sales were offset by higher costs just as the EV maker braces for slowing demand in the U.S. following the expiration of an EV tax credit.
For the third quarter, the company reported adjusted earnings per share of $0.5 on revenue of $28.1 billion, compared with Wall Street estimates of $0.54 a share and $26.22 billion, respectively.
Total deliveries jumped 7% to 497,098 from the same period a year earlier. Sales were boosted by surge in consumers rushing to secure a $7,500 EV tax credit that expired late last month. However, the jump in sales was offset by higher operating expenses.
Gross margins excluding credits, a closely watched metric, came in at 17%, roughly unchanged from a year ago.
As Tesla faces rising EV competition, some analysts have flagged the company’s ambitions into robotaxis and full self-driving technology as the next major income stream for the Elon Musk-led company. The firm’s AI and autonomous opportunity is worth at $1 trillion, researchers at Tesla have said.
Tesla offered some insight into these initiatives, saying that its "Cybercab" two-passenger battery-electric self-driving car, which is part of its robotaxi service, remains on schedule for volume production in 2026. The company added that its Optimus humanoid robot has now formally been positioned for near-term production.
"Tesla remains very well positioned, and full self-driving and robotaxi will be critical value drivers," analysts at Stifel said in a note.
But analysts at Vital Knowledge argued that much of the debate on Wall Street regarding Tesla is swirling around "what exactly" the business, not necessarily whether it is performing well.
"If it’s just an auto company, then the stock is wildly overvalued [...]," they wrote. "If it’s an AI/robotics/autonomous driving company, which Elon [...] claims [...], then the stock will continue to trade around present levels."