Following an earnings report, Tesla shares declined 9%, and Elon Musk issued a cautious statement

Following an earnings report, Tesla shares declined 9%, and Elon Musk issued a cautious statement

The day after the electric car manufacturer reported third-quarter numbers that missed on both the top and bottom lines, Tesla shares fell more than 9%.

Tesla’s adjusted earnings per share of 66 cents and revenue of $23.35 billion both fell short of the projections made by Wall Street. Since the second quarter of 2019, this was the first time Tesla had missed on both earnings and revenue.

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CEO Elon Musk provided dismal remarks about the state of the global economy during the company’s quarterly call with investors. He voiced concerns about the climate of high borrowing rates and claimed that it made it more difficult for consumers to purchase cars.

Before the business goes “full-tilt” on creating a new factory in Mexico, Musk said Tesla will focus on lowering the costs of its automobiles.

Musk noted during the call “We have to make our goods more affordable so that individuals can buy them.”

Due to Tesla’s “lower gross margin profile,” analysts at Bank of America restated their neutral rating on the stock and lowered their projections for the company’s fourth quarter and subsequent years. The length of Musk’s discussion of the world economy also caught the analysts’ attention.

In a report published on Thursday, Bank of America analysts noted that Elon Musk (CEO) has spent a lot of time discussing the consequences of the present high-interest rates on the macroeconomic climate.

In a similar vein, Morgan Stanley analysts claimed on Thursday that Tesla’s weak third-quarter results were overshadowed by the “cautious commentary” surrounding the economy, which “set the tone for the immediate stock reaction.”

The Morgan Stanley analysts stated, “In our opinion, 3Q23 was one of the most circumspect Tesla conference calls we’ve heard in years.” They continued by saying it was reasonable to be cautious about financing rates, but they questioned how much of Tesla’s caution was genuinely brought on by competition or a downturn in demand.

Musk also stated on the investor call that he wanted to “temper expectations for Cybertruck,” adding that it will be a year or longer before the truck becomes a “significant positive cash flow contributor.”

The comments made by Musk were enough to concern Deutsche Bank analysts.

“Tesla’s 3Q earnings miss and cautious anticipatory comments within vehicle demand, 2024 growth outlook, the slow and costly ramp of Cybertruck, and unsure timeline of next-gen platform, strengthen our published concerns on the company’s challenging fundamentals heading into next year,” wrote the analysts at Deutsche Bank in a note on Thursday.

The analysts expressed continued concern about Tesla’s projected expansion until 2024.

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