In This Story
Tesla stock was down Wednesday after the company reported second-quarter earnings that missed Wall Street’s expectations and took a 45% hit to profits.
The Austin, Texas-based automaker reported net income of $1.5 billion for the April to June quarter, down from $2.7 billion a year earlier. However, revenue hit $25.5 billion, a 2% increase compared to last year and above the $24.5 billion expected by Wall Street. That was thanks to growth outside the electric vehicle business, namely Tesla’s energy sector.
Automotive revenue fell 7% compared to a year earlier after the company delivered 443,956 units during the quarter, down almost 5% from 2023. While a better result than analysts had expected — and a major boon for the stock — those sales came at the cost of margins.
While EV sales are growing, the pace of that growth has slowed. That, combined with increased competition from rivals, pushed Tesla to employ a number of incentives to boost sales, such as reduced interest rates and price cuts.
“There have been quite a few competing electric vehicles that have entered the market and mostly, they have not done well, but they have discounted their EVs quite substantially, which has made it more a bit difficult for Tesla,” CEO Elon Musk said on a call with analysts Tuesday. Musk added that he sees this as a “fairly short-term” issue for the company.
Tesla stock was down more than 8% in pre-market trading Wednesday. Shares are down about 1% year to date, after staging a comeback propelled by shareholder support for Musk’s $56 billion compensation package.
Despite the earnings miss, there’s a lot for investors to look forward to, Wedbush Securities analyst and Tesla bull Dan Ives said in a Wednesday morning note. “[T]he next phase of the Tesla growth story is around autonomous, Robotaxis, and AI playing out for Musk & Co. in our view and that vision is on the doorstep,” Ives wrote.
Musk announced Tuesday that Tesla has moved its robotaxi unveiling event to Oct. 10. Robotaxis, or a fleet of self-driving Teslas, are expected to serve as the backbone for an eventual ride-hailing service, and they’re a major driver of enthusiasm for the stock. In response to an investor-submitted question, Musk said Tesla’s first robotaxi ride will come “for sure next year.”
During the call, Musk repeated his belief in the value of humanoid robots like Tesla’s Optimus, which he said will be used internally at Tesla next year. He upgraded his forecast for internal usage from 1,000 robots — as of last month — to “several thousand” by the end of 2025.
Musk also said that Tesla has completed “most of the engineering” of the next-generation Roadster sports car, which Musk has boasted would be able to hit 60 miles per hour in under a second and would be marked with a $200,000 price tag. The electric car was initially expected to launch by 2021.