Tesla Stock Tumbles Following Disappointing Q3 Results and Cautious Commentary

Shares of Tesla fell more than 9% on Thursday, following the release of the electric automaker’s third-quarter results, which fell short of Wall Street’s expectations. Tesla reported revenue of $23.35 billion and earnings of 66 cents per share, adjusted, marking the first time since Q2 2019 that the company missed on both earnings and revenue.

During the quarterly call with investors, CEO Elon Musk expressed concerns about the current state of the global economy, particularly the high interest rate environment. Musk stated that this makes it more difficult for consumers to purchase cars and highlighted the need to bring down the costs of Tesla vehicles to make them more affordable.

In response to the disappointing earnings and cautious commentary about the economy, analysts at Bank of America reiterated their neutral rating on the stock and lowered their estimates for Tesla’s fourth quarter and future years. They cited the company’s “lower gross margin profile” as a reason for their revised outlook. The analysts also noted the amount of time Musk spent discussing the broader macro environment and the effects of high interest rates during the call.

Likewise, Morgan Stanley analysts commented on the cautious tone set by Tesla’s comments on the economy during the Q3 earnings call. They stated that the call was one of the most cautious they have heard in years and questioned whether Tesla’s caution is primarily due to competition or slowing demand.

Musk’s remarks during the investor call also concerned analysts at Deutsche Bank, who noted that Tesla’s earnings miss and cautious forward-looking comments raise concerns about the company’s challenging fundamentals heading into next year. They expressed particular concerns about Tesla’s 2024 growth, citing uncertainties surrounding vehicle demand, the slow and expensive ramp of the Cybertruck, and the uncertain timeline of the next-gen platform.

Overall, Tesla’s disappointing Q3 results and cautious commentary about the economy have led to a significant drop in the company’s stock. Analysts remain concerned about Tesla’s growth prospects and the challenges the company may face in the coming years.