Elon Musk stated Tesla will focus on growth and new products as the company’s performance disappoints investors.
Tesla reported worse-than-expected quarterly earnings, showcasing significant weakness in its strategy to maintain a dominant position and grow its business. The report came after the bell on Tuesday. Tesla’s stock grew on Wednesday morning after optimistic promises by the company’s CEO Elon Musk.
Revenues for the EV carmaker came in at $21.3 billion, a 9% decline since the previous quarter. Earnings-per-share amounted to 45 cents, a 47% plunge, and the worst report since Q1 2021.
Markets were expecting a 5% revenue decline and a 45% EPS fall. Profits for the January-March period totaled $1.13 billion, less than half of the previous quarter.
This earnings report came at the end of a tumultuous start of the year for Tesla. Quarterly sales plunged far more than expected at 8.5% less than the previous quarter, losing Tesla the top spot as the world’s largest EV carmaker.
Musk’s company is currently besieged by strong competitors, coming mainly from China. American and European brands are also aggressively expanding in the EV sector, fearing for their competitive market position as the industry shifts away from fuel engines.
Tesla, however, is sitting idle. The company’s latest release, the Cybertruck, was a complete disaster. Before that, the last model released by Tesla dates back to 2019, when few traditional carmakers competed in the EV sector.
Market confidence
Despite the disastrous quarterly performance, Tesla’s stock price jumped almost 12% in pre-market trade on Wednesday.
Together with the quarterly report, Elon Musk released very optimistic statements about the company’s near future. Musk pledged to foster Tesla’s growth "by advances in autonomy and introduction of new products, including those built on our next generation vehicle platform."
Musk promised to roll out a new cheap EV model by early 2025, or even the end of this year. The long-awaited cheap Tesla model has been rumored for years, with Reuters reporting it was scrapped from the development board last month. Musk rejected those claims, saying the company was simply refocusing on robotaxis.
Self-driving taxis were also part of Musk’s announcement. He confirmed a new robotaxi model will be announced on August 8th, adding that "The way to think of Tesla is almost entirely in terms of solving autonomy and being able to turn on that autonomy for a gigantic fleet."
Analysts called the announcement a clever way to sweep last quarter’s performance below the carpet. "Unlike many companies that are shrinking capital spend in the current environment, Tesla is going against the grain... and puts it in a strong position as the EV market gets more competitive and price sensitivity increases," Kathleen Brooks, research director at XTB, said.
