FSR - Tesla skids 10% after earnings disappoint and drags down other EV stocks

2023-07-20 16:17:35 ET

Tesla ( NASDAQ: TSLA ) ended Thursday with a drop of 9.74% to place shares at their lowest level in three weeks. Volume on the EV stock was a stunning 173M shares for the session.

Why the 10% haircut in share price? The big drop in Tesla's ( TSLA ) margins during Q2 caused some concerns with investors about whether the back half of the year will see further weakness due to lower pricing and cost pressures. Total GAAP operating margin fell to 9.6% in Q2 from 11.4% in Q1 and 14.6% a year ago. The same margin metric was at 20.8% two years ago. Gross margin came in at 18.2% in Q2 vs. 25.0% a year ago. Adjusted EBITDA margin also went in reverse, dropping to 18.7% in Q2 from 22.4% a year ago.

The margin decline during the quarter was due in part to TSLA lowering prices. During the earnings call, Elon Musk stated the electric vehicle maker will cut prices again if economic conditions worsen.

Morgan Stanley analyst Adam Jonas pointed to some of the positives from the call in terms of looking at the stock for the long term. Elon Musk confirmed Tesla ( TSLA ) is open to licensing full self-driving software to other auto companies. Tesla ( TSLA ) was also noted to have touted the importance of AI to drive long-term value for the company through FSD/Autonomy, Optimus and other applications.

Elsewhere in the electric vehicle sector, notable decliners included Hyon Motors ( HYZN ) -9.9% , Cenntro Electric ( CENN ) -7.7% , Canoo ( GOEV ) -7.7% , Fisker ( FSR ) -5.7% , Zapp Electric Vehicles ( ZAPP ) -5.6% , and Polestar Automotive ( PSNY ) -5.0% .

More on Tesla:

• Inside Tesla: All eyes on the margin line
• Tesla: Consider Selling The News
• Tesla Beat Q2 Earnings Estimates, But Margins Keep Shrinking
• Tesla: Q2 Results Keep Rally Going
• Growth metrics on Tesla

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