Tesla stock tumbles after its profit plunged

Tesla stock tumbles after its profit plunged: After the electric vehicle manufacturer announced that second-quarter earnings were lower than anticipated by more than 40%, Tesla (TSLA) stock received a downgrade and multiple target price reductions overnight. My escalating regulatory credits were fueled by record revenue.

Following Tesla’s conference call and Q2 earnings, TSLA shares fell 12% to 216.72 during Wednesday’s market action.

Outlook has not changed; Downgrade of Tesla Adam Jonas, a well-known Morgan Stanley autos analyst who is also a supporter of Tesla, wrote late on Tuesday that there is “no big change in outlook” and that Tesla is “muddling through the EV recession.”

In addition, Jonas stated that the outlook for 2024 “should keep consensus little changed” and is “largely identical reiteration of language from the previous quarter’s outlook.”

Following profit, Cantor Fitzgerald downsized Tesla to impartial from overweight while lifting the value focus to 245 from 230. “Becoming a bit more conservative on valuation in the near-term,” the company wrote, noting that TSLA has increased by more than 70% in the past three months.

In the meantime, Citigroup and Goldman Sachs lowered their targets for Tesla stock prices. Goldman Sachs maintained a neutral rating and lowered Tesla’s price target from 248 to 230. The analyst at Citi, Itay Michaeli, lowered his target price from 274 to 258.

A Quick Look at Tesla’s Earnings On Tuesday, the electric vehicle giant revealed that its earnings decreased by 43% to 52 cents per share. In the meantime, revenue for the quarter was $25.5 billion, up 2% from the same period last year. “Achieved record quarterly revenues despite a difficult operating environment,” Tesla reported.

In the meantime, Tesla’s gross margins decreased to 18% by 23 basis points. Auto gross edges, barring administrative credits and rents, came in at 14.6%. FactSet stated that 15.1% was anticipated by analysts.

The EV monster likewise saw income from administrative credits hit a record of $890 million in Q2, flooding 216% contrasted with the $282 million from Q2 2023.

Tesla added vehicle volume development rate in 2024 “might be eminently lower than the development rate” last year. The EV giant went on to say that the growth of its energy storage business should grow faster than that of its automotive division.

Elon Musk, CEO of Tesla, didn’t say much new on the earnings call. He continued to be optimistic about self-driving cars, the Optimus robot, and robotaxi. Musk did confirm that instead of August 8, the robotaxi reveal event will now take place on October 10.

Tesla shares: Not A ‘Trump Exchange’

Wells Fargo composed that Tesla stock doesn’t have all the earmarks of being a ‘Trump exchange.” As a result of the weak fundamentals demonstrated in Q2, the analysts noted that Tesla stock is trading lower.

The company added that Tesla’s near-term profits could suffer if former President Donald Trump wins the election in 2024 and eliminates the Inflation Reduction Act EV tax credits.

Tesla stock tumbles after its profit plunged: According to UBS analyst Joseph Spak, the automotive industry is experiencing stress. Spak wrote that Tesla’s current vehicle lineup is “limited,” and while sales may rise, it may be necessary to continue advertising.

With a price target of 197, UBS maintained its sell rating and stated that the Oct. 10 robotaxi day might be a “sell-the-news” event.

The robotaxi event will “unleash the beginning of the AI story at Tesla, which we value at $1 trillion alone over the next few years,” according to Wedbush Securities analyst Dan Ives, a longtime Tesla supporter.

Ives went on to say that investors in Tesla will pay attention to the total regulatory credit revenue and auto gross margins. “Table stakes in the broader Tesla story,” the analyst stated.

Ives wrote, “Tesla is a robotics and AI play.” As part of this broader AI/Robotaxi strategy, Musk may also make investments in the xAI company. This would be a smart move.

Musk polled X after the earnings call to see if Tesla should invest $5 billion in Musk’s artificial intelligence company, xAI. The CEO of Tesla went on to say that such an investment would need to be approved by the board and shareholders.

According to MarketSurge chart analysis, Tesla stock has a 271 handle buy point on a consolidation that dates back several months to a year.

Shares on Wednesday plunged undercut their quick rising 21-day moving normal and the low of the handle.

Investors were optimistic going into earnings, and Tesla stock surged more than 25% in July after the electric vehicle manufacturer revealed a surprise increase in vehicle deliveries in the second quarter.

Investors as of late casted a ballot for giving Musk his 2018 $56 billion compensation bundle and reincorporating the organization in Texas, moving it from Delaware.

In the 35-member IBD Auto Manufacturers industry group, Tesla stock ranks third. A Composite Rating of 85 out of a possible 99 is assigned to the stock. The shares have an EPS Rating of 61 and a Relative Strength Rating of 89.