Tesla Share Price Plunged 7.23% on Weak Q3 Profits and Revenues

Tesla Inc's (NASDAQ: TSLA) share price plunged 7.23% after reporting a net income of $1.9 billion for the third quarter that ended on 30 September 2023, marking a 44% decrease from the previous period. Despite this, the electric vehicle company recorded $23.4 billion in revenue, which reflected a 9% increase compared to the same quarter the previous year. 

However, Tesla’s revenue figure fell below the expectations of Wall Street analysts of $24.1 billion. The EV company’s operating margin took a notable hit, dropping to 7.6% for the third quarter. In contrast, the company had reported an operating margin of 17.2% for the same period the previous year. 

Several factors contributed to this decline, including price reductions in markets like China, the U.S., and Japan, along with increased spending on initiatives such as developing the Cybertruck, artificial intelligence, and upgrading its manufacturing facilities.

After the Q3 financial report was released, Tesla’s shares climbed as much as 2.4% in extended trading. However, the stock took a downturn, falling by over 4% following comments from CEO Elon Musk.

Musk cautioned that the Cybertruck would not generate significant positive cash flow within 12 to 18 months after production commences. He also stressed the company's commitment to making its cars more affordable, especially in the current high-interest rate environment. 

This quarter marks the first time since the July 2019 report that Tesla has fallen short on both earnings and revenue expectations. Despite plans to construct a new factory in Mexico, Tesla's executives have emphasised the need to reduce car prices before fully committing to the Mexico facility. 

In a recent announcement on Twitter (X), which Elon Musk now owns, the company confirmed that “Cybertruck production remains on track for later this year, with first deliveries scheduled for November 30th at Giga Texas.” 

According to the information provided in the shareholder presentation, the Cybertruck is currently in a “pilot production” phase, and the Texas factory can manufacture up to 125,000 units per year. 

In the third quarter of this year (July to September), Tesla reported that it produced 430,488 vehicles and delivered 435,059. Notably, the Shanghai Gigafactory contributed significantly to Tesla's production and deliveries, accounting for up to 51% of its production. 

Tesla share price. 

The Tesla share price plunged 7.23% to trade at $225.09, from Wednesday’s closing price of $242.68.