Tesla shares have fallen nearly 10 per cent after reporting earnings for the quarter that ended March 31. This decline comes following a decrease in earnings over last year's period.
Thursday saw Tesla shares drop nearly 10% after the company reported an annualized drop of more than 20 per cent in both net income and earnings per share compared to last year.
Tesla announced a net profit of $2.51 Billion for the first quarter 2023, down by 24% year over year and with GAAP earnings coming in at 73 cents per share (down 23%) compared to last year. Tesla CEO Elon Mots commented on how their preference was for higher volumes over higher margins which caused concern among analysts.
Musk stated in a conference call to discuss earnings that they have decided that "pushing for higher volumes and fleet size is better than pushing for lower quantities at higher margins". Over the course of six cuts since January's inception, including one made on Tuesday. Model 3 prices have seen reductions by 11 percent this year while prices of Model Y cars have seen significant decreases (about 20% reductions).
Wells Fargo issued a note Thursday warning of discounting due to potential long-term damage for Tesla's reputation, reducing their price target from $190 to just $170.
Oppenheimer analysts reported that while Tesla could potentially gain market share through price cuts in the long term, near term margin pressure remains an investor concern. Oppenheimer assigned Tesla shares with a "perform rating."
Tesla shares have continued their upward momentum despite suffering underperforming tech stocks during 2022, as evidenced by Wednesday's closing prices; shares had gained nearly 47% year-to-date as of Wednesday closing.
