Tesla’s Stock Sees Largest Weekly Drop in a Year Due to Cybertruck Concerns
During the recent quarterly conference, Tesla’s CEO, Elon Musk, expressed such negative sentiments about the state of the global economy that unintentionally, it seems, this pessimism spread to investors. As a result, Tesla’s stock experienced a 15% decrease in value this week, marking its most significant weekly drop since the beginning of the year.
Nonetheless, as CNBC emphasizes, Tesla’s stock has grown by 96% since the beginning of the current year, which can hardly be considered a poor performance. However, the company’s revenue and profits have both declined sequentially, with a yearly drop of 44% in profits. Tesla’s prospects are also somewhat unclear; during the quarterly event, the company’s CEO didn’t provide any updates on the robotaxi, the next-generation EV platform, or the timeline for full self-driving.
After announcing intentions to begin deliveries of the Cybertruck, an electric pickup truck unveiled four years ago, Elon Musk cautioned consumers and investors to temper their expectations regarding this new model. Firstly, significant profits from its sales will only materialize in a year or more. Secondly, Musk went so far as to say, “We’ve dug our own grave with Cybertruck.” Musk explained that the company has received over 1 million pre-orders for the pickup, and while demand is not an issue, producing the electric vehicle at a price affordable for customers will be extremely challenging. Earlier, Musk pointed out that using stainless steel panels for the Cybertruck’s body makes its assembly a highly complex technological operation.
Although the delivery date for the Cybertruck is set, Tesla has yet to update the information about its pricing, configurations, and specifications, which have inevitably become outdated over the past four years. Tesla’s new CFO, Vaibhav Taneja, emphasized at the recent quarterly event that the company’s top priority is reducing the cost of manufacturing their vehicles. He also noted that Tesla’s efforts to cut production costs are lagging behind the rate at which vehicle prices are being reduced, leading to a negative impact on the business’s profitability. In the third quarter, the company’s overall profit margin decreased year-over-year from 25.1% to 17.9%, and the operating profit margin fell from about 17% to 7.6%. Moreover, the profit margin on the vehicle manufacturing front sequentially dropped from 18.1% to 16.3%, which is seen as concerning when extrapolated over a year.
Musk’s attempts to sweeten the deal with discussions about the potential of artificial intelligence technologies, enabling Tesla to create self-driving EVs and humanoid robots, did not have the desired impact on investor sentiment, as the statistics carried more weight than AI promises. For example, analysts at Wells Fargo have stated that they are no longer inclined to view Tesla’s stock prospects through “rose-colored glasses.” Morgan Stanley experts have lowered their stock price forecast for the company from $400 to $380, although even this figure is 56% higher than the current quotes. Analysts at Bernstein, who are traditionally pessimistic, have set their prediction at $150 per Tesla share, given the current value of $212. As representatives of Morgan Stanley summarized, the entire electric vehicle market is entering a challenging phase of its development.
- I'm Martin Harris, a tech writer with extensive experience, contributing to global publications. Trained in Computer Science, I merged my technical know-how with writing, becoming a technology journalist. I've covered diverse topics like AI and consumer electronics, contributing to top tech platforms. I participate in tech events for knowledge updating. Besides writing, I enjoy reading, photography, and aim to clarify technology's complexities to readers.
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