Tesla share price tumbles 4% as profitability sinks

Tesla investors 'aren't accustomed to being disappointed'.

| More on:
A woman in jeans and a casual jumper leans on her car and looks seriously at her mobile phone while her vehicle is charged at an electic vehicle recharging station.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Electric car and battery maker Tesla Inc (NASDAQ: TSLA) saw its share price sink 4.2% in after-hours trading on Thursday morning Australian time after what experts called a "mixed" quarterly update.

Despite lifting sales, eToro market analyst Josh Gilbert said that the market was lukewarm on the company because its automotive margin fell to 18.1%.

"A disappointing result, but it's worth noting that these margins are still far higher than the broader automotive industry and are still extremely impressive," he said.

"But Tesla shareholders aren't accustomed to being disappointed."

'Ahead of the competition'

Admittedly, the market shouldn't have been surprised as chief executive Elon Musk has stated previously that he would prioritise growth over short-term profits.

"Revenues were up 47% year-over-year, and deliveries reached a record level at 466,000," said Gilbert.

"Price cuts from the start of the year are clearly paying dividends, and the expectation of new models in the not-too-distant future, such as the Cybertruck, should help to aid this juggernaut sales growth."

Created with Highcharts 11.4.3Tesla PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

Because its electric vehicles hog the limelight, it's easy to forget that Tesla actually makes other products, such as batteries and chargers.

"Its recent supercharger deals showing they are leaps ahead of the competition, not to mention its involvement with AI for self-driving vehicles and its energy business that saw 74% growth in the quarter," said Gilbert.

"The key for investors from here is to see Tesla stabilise its margins over the next few quarters whilst continuing to drive volumes to reach that all-important 50% growth target by year-end."

After falling 65% over 2022, Tesla shares have enjoyed a remarkable resurgence this year. The stock is now more than 169% higher than where it started 2023.

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on International Stock News

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
International Stock News

Alphabet's AI push is accelerating — Is the stock a buy now?

Alphabet is looking to be a big winner in artificial intelligence, defying skeptics.

Read more »

A man has computer-generated images rushing through his head indicating an AI (Artificial Intelligence) concept of a communication network.
International Stock News

Where Will Nvidia Be in 5 Years?

The AI infrastructure leader has had a phenomenal run in recent years.

Read more »

A woman smiles as she powers up her electric car using a fast charger.
International Stock News

Better EV Stock: Alphabet vs. Tesla (Hint: Robotaxis Are the Key)

Which company is better placed, and which is the better stock?

Read more »

woman watching Netflix and flicking the channel
International Stock News

1 Remarkable Stat That Highlights Just How Amazing Netflix Stock Has Been in Recent Years

Netflix has routinely been a market-beating stock, soaring around 150% in the past five years.

Read more »

A woman sits in a cafe wearing a polka dotted shirt and holding a latte in one hand while reading something on a laptop that is sitting on the table in front of her
International Stock News

1 super artificial intelligence (AI) stock billionaire Bill Gates has 25% of his foundation's portfolio invested in

It's a company that Gates knows quite well.

Read more »

Five young people sit in a row having fun and interacting with their mobile phones.
International Stock News

5 reasons to buy Nvidia stock like there's no tomorrow

Nvidia's future should be even more exciting than its present.

Read more »

Hand with AI in capital letters and AI-related digital icons.
International Stock News

Prediction: This unstoppable artificial intelligence (AI) stock will join Nvidia, Microsoft, Apple, Amazon, and Alphabet in the $2 trillion club by year's end

The parent of Facebook, Instagram, and more could benefit more than anyone else from advancements in generative AI.

Read more »

Amazon boxes stacked up on a doorstep.
International Stock News

Should you buy Amazon stock before July 31?

Amazon is trailing the market this year.

Read more »