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Tesla Shares Drop 8% in Extended Trading After Q2 Profit Misses Estimates

Tesla’s share price fell 8% in extended trading after the company’s net profit for the second quarter missed Wall Street’s expectations, marking its lowest profit margin in over five years. The shares dropped 7.7%, ending at $227.23 in after-hours trading.

Q2 Financial Performance

  • Net Income: Dropped to $1.48 billion from $2.70 billion a year ago.
  • Adjusted Earnings: Came in at 52 cents per share, below the Wall Street estimate of 62 cents per share.
  • Revenue: Reported at $25.50 billion, slightly above last year’s figure and analyst predictions.

Reasons for the Decline

  • Price Cuts: To boost demand, Tesla reduced prices, affecting net income.
  • Increased Spending: Higher spending on AI projects added to costs.
  • Restructuring Charges: The company faced additional costs due to restructuring and laid off more than 10% of its workforce.

Profit Margins

  • Automotive Gross Margin (excluding regulatory credits): Was 14.6%, below the analyst estimate of 16.3%.
  • Regulatory Credits: Sales of these credits almost tripled to a record $890 million compared to a year earlier.

Future Outlook

Tesla expects a rise in production in the third quarter. However, CEO Elon Musk noted that new competitors have significantly discounted their EVs, making the market more challenging for Tesla.

Product and Regulatory Updates

  • Robotaxi: The unveiling has been postponed to October 10 from August 8 to allow for important changes. The deployment timing depends on technological advancements and regulatory approval.
  • Full Self-Driving Software: Musk anticipates regulatory approval for its “supervised” Full Self-Driving software in China and Europe by the end of the year.

Stock Performance

Year-to-date, Tesla’s share price has eased by 0.8%. However, the stock has surged over 30% since June 13, when shareholders approved Musk’s $56 billion pay package.

Disclaimer: The views and investment tips expressed by investment experts on Sharepriceindia.com are their own and not those of the website or its management. Sharepriceindia.com advises users to check with certified experts before taking any investment decisions.​​

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