Tesla’s Growth Outlook Questioned as Stock Falls


Summary: Tesla’s stock tumbled 5% as analysts raised doubts about the company’s ability to maintain its rapid growth in the electric-vehicle market. CEO Elon Musk expressed concerns about the impact of high interest rates on demand, following the company’s missed revenue estimates. Analysts predict further price cuts and pressure on profitability in the coming months. Despite these challenges, Tesla’s stock has nearly doubled in 2023, with investors optimistic about its long-term prospects and self-driving efforts.

Tesla’s stock fell 5% on Thursday as Wall Street analysts voiced skepticism about the company’s ability to sustain its impressive growth in the electric-vehicle market. CEO Elon Musk, who had previously deemed Tesla as ‘recession-resilient’, expressed apprehension about the impact of high interest rates on demand. This comes after the company reported missing revenue estimates by the largest margin in three years, despite implementing significant price cuts.

The change in tone from Elon Musk, one of the most prominent auto executives, has sparked concerns about the outlook for the electric-vehicle industry as a whole. Tesla’s market capitalization, the highest among automakers, was expected to decrease by almost $40 billion as a result. Canaccord Genuity analysts noted that Tesla’s recent earnings call lacked its usual excitement and suspense, indicating a shift in the company’s performance.

In order to meet its goal of delivering 1.8 million vehicles this year, Tesla is anticipated to further reduce prices in the current quarter. However, the company’s gross margin for the third quarter decreased to 17.9% from 25.1% in the previous year. Chaim Siegel of Elazar Advisors stated that Tesla’s auto business is now considered a legacy business.

The release of the ‘Blade Runner’-inspired Cybertruck is expected to impact profitability in the coming months, potentially offsetting the benefits from declining commodity prices. As a result of these concerns, seven analysts have lowered their price targets for Tesla’s stock, with the median expectation now at $260.

Tesla’s shares were trading at $229 in premarket trading, and the stock has almost doubled in value this year. Investors remain optimistic about Tesla’s performance compared to its competitors in an uncertain economy, as well as its self-driving technology. The financial struggles faced by smaller electric-vehicle startups and the ongoing strike among Detroit Three automakers have further contributed to the positive sentiment surrounding Tesla. While Tesla trades at a forward earnings estimate of 59 times, Ford is at 6.3 times and General Motors at 4.2 times.

Tags: Tesla, growth outlook, electric-vehicle market, revenue estimates, price cuts, profitability, stock, automakers, Cybertruck, investors