NASDAQ value Tesla share deep in the red before the market: Tesla with a strong increase in sales – but also a drop in profits

Significant price reductions have caused Tesla’s profit to fall sharply at the beginning of the year, despite a jump in sales. The bottom line is that the electric car manufacturer made money from star entrepreneurs Elon Musk $2.5 billion in the three months ended March, down 24 percent from a year ago. Tesla announced this on Wednesday after the US stock market closed. Revenue grew 24 percent to $23.3 billion. Analysts had expected a little more.

Tesla delivered 422,875 electric cars in the first quarter. The company thus equaled its previous record, but fell short of expectations. Musk boosted sales with heavy discounts, and there have already been several rounds of price cuts this year. Profitability is suffering as a result – Tesla’s operating profit margin fell from 16.0 to 11.4 percent quarter-on-quarter. A year ago it was still 19.2 percent. Tesla is still way ahead in the industry. For comparison: The margins of Ford Motor and General Motors were recently five and seven percent.

Musk justifies the lower prices by wanting to make e-cars affordable for the masses. There is no lack of demand. However, Tesla made about 18,000 more vehicles last quarter than the company shipped. “Tesla is going through a difficult period. Inventories are rising,” commented auto expert Gene Munster of investment firm Deepwater Asset Management. Analysts see Musk’s aggressive pricing policy as a reaction to the increasing competition in the electric car business, which is developing from a niche to a mass market.

In the meantime – not least due to regulatory pressure – almost all established car manufacturers have entered the competition with high investments. In order to stay on course for growth and defend its market leadership, Tesla has little choice but to help out with purchase incentives. However, according to its own statements, the company assumes that it will retain one of the highest profit margins in the automotive industry in the future, despite the price cuts. Tesla is also sticking to the ambitious goal of expanding production with annual growth rates of 50 percent and believes it is still on course to deliver around 1.8 million cars this year.

Tesla stock under pressure – eToro: Focus was on margin – which disappoints

After a disappointing quarterly report from Tesla, the shares came under pressure in German trading on Thursday. On XETRA they temporarily lost 7.88 percent to EUR 152.36. The price fell to a low since the end of January and also slipped below the 90-day line at around 165 euros, which is considered an indicator of the medium to longer-term trend. Tesla shares are also temporarily down 7.53 percent at $167.00 in pre-market NASDAQ trading.

“The focus of the quarterly report was always on whether Tesla can maintain the impressively high margins,” wrote analyst Josh Gilbert of investment house eToro. However, the gross margin has now fallen to 19.3 percent, the lowest level since 2020. It is also significantly weaker than the market consensus of 21.2 percent.

A margin of at least 20 percent was the “key mark” on the market, and investors are now likely to react with disappointment.

Editorial office finanzen.net / AUSTIN (dpa-AFX) / FRANKFURT (dpa-AFX Broker)

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