Tesla shares slip as gross margin fails to match estimates

Elon Musk managed to get investors to pay more mind to Tesla’s potential in a future dominated by artificial intelligence than its sluggish sales and earnings at present.

Tesla's second-quarter margin dipped as price cuts and incentives to spur sagging demand continued to hurt the bottom line while the company intensifies its self-driving technology efforts, it said on Tuesday.

Tesla recorded automotive gross margin excluding regulatory credits of 14.65% in the second quarter, compared with estimates of 16.29%, according to 20 analysts polled by Visible Alpha.

Shares of the electric-vehicle maker were down about 4% in trading after the bell.

The company on Tuesday reported revenue of $25.5bn for the three months ended June, compared with $24.93bn a year earlier. Analysts on average had estimated $24.77bn, according to LSEG data.

Net income was $1.48bn in the second quarter, compared to $2.7bn a year ago.

It has been a volatile time even by Tesla standards, with the chief executive Elon Musk battling for more control of the company, turning back from a $25,000 electric vehicle and ordering mass layoffs.

These erratic episodes helped send the stock on a 43% plunge as of April 23, the day Tesla last reported earnings.

The shares have been on a tear since then, despite an uninspiring set of results and the downward trend in expectations for the second-quarter figures Tesla will report Tuesday.

The main rouser of a rally that added more than $386bn to Tesla’s market capitalisation in just 11 weeks was none other than Mr Musk.

Mr Musk managed to get investors to pay more mind to Tesla’s potential in a future dominated by artificial intelligence than its sluggish sales and earnings at present.

Elsewhere, Porsche shares fell the most on record after the luxury-car maker cut its outlook for the year, saying a shortage of aluminium parts could force it to stop production of some models.

The German manufacturer now expects a return on sales of as much as 15%, down from a high of 17%. The Volkswagen-controlled company, which is struggling with weak demand in China, also reduced its forecast for revenue and the proportion of electric-vehicle sales.

The supply shortage is the result of the flooding of a production facility of an important European supplier, Porsche said. The issue has affected aluminium components that are used in all of the brand’s vehicles, and output could be affected by several weeks. 

Porsche declined as much as 7.7% in Frankfurt, the steepest intraday drop since they started trading in September 2022.

Reuters and Bloomberg