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."
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'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."
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.
