Tesla’s stock dropped 8% in extended trading after the electric vehicle (EV) maker’s net earnings in the second quarter fell short of Wall Street expectations and announced its lowest profit margin in more than five years. Tesla shares fell 7.7% to $227.23 after hours.
Tesla’s Q2 net income fell to $1.48 billion from $2.70 billion a year earlier, owing to price cuts to boost demand and greater spending on AI initiatives. The company’s adjusted earnings per share were 52 cents, falling short of the Wall Street consensus of 62 cents, according to LSEG, Reuters reported.
Tesla claimed its earnings were also hampered by restructuring charges and an increase in operating expenses, which were mostly driven by artificial intelligence (AI) programs. To save costs, the corporation laid off more than 10% of its staff.
The company announced second-quarter revenue of $25.50 billion, which was marginally higher than last year and analyst expectations.
Tesla’s Q2 automotive gross margin excluding regulatory credits was 14.6%, compared to analysts’ expectations of 16.3%. In the second quarter, the company’s regulatory credit sales nearly tripled from the previous year, reaching a record $890 million. Traditional automakers purchase credits from Tesla to achieve clean-vehicle manufacturing regulatory targets.
Tesla anticipated a sequential increase in output in the third quarter
During a conference call with investors, Tesla CEO Elon Musk mentioned that new competitors have significantly lowered the prices of their EVs, making it somewhat more challenging for Tesla.
Tesla postponed the introduction of its Robotaxi product from August 8 to October 10 to make some significant improvements. The organization explained that the “timing of the Robotaxi rollout is contingent on both technological progress and regulatory approval.”
However, Musk predicted that Tesla would receive regulatory approval for its “supervised” Full Self-Driving software, which requires driver attention, in China and Europe before the end of the year.
Tesla’s share price has fallen 0.8% year to date (YTD), but it has recovered more than 30% since June 13, when shareholders approved Musk’s $56 billion compensation plan.
Read Also: Paytm shares: Rs 325 or Rs 600? Analyst opinions after Q1 results
