Tesla’s ambitions often clash with its ability to deliver specific outcomes, a challenge that became evident on Tuesday following the company’s second-quarter earnings report. Despite achieving record revenue, Tesla’s financial performance fell short of expectations, leading to a significant drop in its stock price.
Tesla reported earnings of 42 cents per share for Q2, a decrease from 78 cents a year ago and four cents below the consensus estimate of 46 cents. Revenue rose to $25.5 billion, up 2.3% from the previous year’s $24.9 billion. However, the company’s shares fell by 2% to $246.38 during regular trading hours and plummeted by nearly 8% to $227.25 in after-hours trading.
If the after-hours price holds on Wednesday, Tesla’s shares will have declined by 11.4% from the July 16 close of $256.56. This prior peak had marked an 85% increase from the 52-week low of $138.80 reached on April 22. Tesla underperformed compared to its peers in the Magnificent Seven, with Amazon.com emerging as the day’s top performer, gaining 2.1% to $186.41.
The decline in Tesla’s stock was exacerbated by CEO Elon Musk’s ambiguous updates on future product timelines. The much-anticipated unveiling of the Robotaxi has been postponed from August 8 to October 10, a delay Musk confirmed during the earnings call. Additionally, the introduction of Tesla’s Optimus industrial robots may be deferred until 2025, although initial deployments could occur by late 2024.
The company’s earnings miss was further magnified by a $622 million restructuring charge related to earlier layoffs, which temporarily dragged shares down to $179.95. Adjusted earnings, excluding this charge, were reported at 66 cents per share—still below last year’s figures but surpassing estimates. Tesla’s gross profit margin also fell to 14.6%, the lowest in five years.
Despite higher-than-expected vehicle deliveries and the resolution of disputes over Musk’s pay package, the market remains unsettled by uncertainties surrounding new technologies, including the Robotaxi, Full-Self-Driving features, and the availability of a new roadster. Musk indicated that the roadster might be ready next year, pending engineering solutions.
Tesla has now missed earnings targets for four consecutive quarters. Analyst Dan Coatsworth of AJ Bell commented that while Tesla’s futuristic narratives—such as robotaxis and autonomous driving—are intriguing, they represent potential future gains rather than current realities.
Musk’s grand vision includes a future where petrol-powered vehicles are obsolete, and most cars are equipped with full self-driving capabilities. The Robotaxi initiative, which Musk projects could be worth $5 trillion, is intended to provide an AI-driven transportation network, potentially making personal car ownership unnecessary.
While Musk remains optimistic about the Robotaxi’s prospects and expects fewer regulatory hurdles outside the U.S., he acknowledged that the withdrawal of federal electric vehicle support, as promised by former President Donald Trump, would have an impact. However, Musk believes that competitors will be more adversely affected.
