Tesla disappoints growth prospects – stock plummets | news

Tesla disappoints growth prospects – stock plummets |  news

San Francisco/Bangalore (Reuters) – US automaker Tesla, which has been spoiled by success, is unable to assuage investors’ concerns that the economic downturn will slow it down, despite sales and profit growth.

“I wouldn’t say we’re recession-proof, but certainly recession-resistant,” Tesla CEO Elon Musk said after the third-quarter results were presented on Wednesday. The demand in the current quarter is excellent. Nevertheless, Musk admitted that Tesla will just miss the target of 50 percent sales growth for the full year. The electric car pioneer also missed the expectations of analysts in terms of sales and earnings, so that the share fell by seven percent in after-hours trading. Since a record high in November last year, the paper has lost around half of its value. Musk promised to buy back shares in the range of $5 billion to $10 billion.

From July through September, Tesla brought in $21.45 billion in sales with sales of nearly 344,000 vehicles (up 35 percent). Compared to the same period last year, that was an increase in revenue of 56 percent. Analysts surveyed by Refinitiv had expected sales of almost $22 billion on average. Net income doubled to $3.3 billion – but the forecasts were higher there too. Rising costs in car production made themselves felt in the gross margin. It remained at the level of the second quarter at 27.9 percent and was therefore two and a half percentage points lower than a year ago. Higher logistics costs weighed on Tesla, and the strong dollar gave Tesla a negative exchange rate effect of $250 million.

“Inflation in raw material costs impacted our profitability along with the inefficiencies of the new factories in Berlin and Texas and the production of the new 4680 batteries,” Tesla said. According to media reports, the US group is struggling with problems introducing a new production process for batteries that is supposed to bring great cost advantages. “There are still challenges that we haven’t overcome yet. No question about it,” said Managing Director Andrew Baglino.

MUSK NEEDS MONEY FOR TWITTER

According to analysts, the economic downturn will not leave the world’s highest-rated automaker unscathed. Signs of this are expensive inventories – a novelty for the electric car pioneer, which has always produced fewer vehicles than it has been able to sell. In the final quarter, however, Tesla will again sell all of the cars it produces, Musk said.

The Tesla boss, who is also the richest person in the world thanks to the high valuation of his blocks of shares and the largest shareholder with almost 15 percent, invoked the potential of his company on the stock exchange. Tesla could be worth more than the two giant corporations Apple and Saudi Aramco combined. Tesla’s market cap is currently under $700 billion, while Apple is worth $2.3 trillion and oil producer Saudi Aramco is worth $2.1 trillion.

Analysts had expected Musk to be optimistic about Tesla. They suspect Musk may need to sell about $3 billion more in stock to fund his Twitter deal after the Tesla earnings report. The deadline is October 28 to close the deal. He was enthusiastic about the $44 billion purchase of Twitter, even if he paid too much for the social media company like other investors. “The long-term potential of Twitter is, in my view, in an order of magnitude greater than its current value.”

(Report by Hyunjoo Jin, Akash Sriram; written by Ilona Wissenbach and Katharina Loesche, edited by Ralf Banser; If you have any questions, please contact the editorial board at frankfurt.newsroom@thomsonreuters.com)

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