In the lead-up to Tesla’s third-quarter earnings, investors and analysts were feeling more than a little nervous. Price cuts and falling margins were foremost on investors’ minds as they braced for the electric vehicle leader’s results.
They were right to be cautious.
Related: Elon Musk just blamed remote workers for Tesla’s struggling car sales
Tesla (TSLA) – Get Free Report missed Street expectations, posting earnings of 66 cents per share, down 37% from the year-ago period and below analyst expectations of 73 cents. The carmaker additionally recorded gross margins of 17.9%, down sequentially and well off of the 25.1% margins Tesla reported last year.
CEO Elon Musk did little to calm investors’ concerns during the conference call, displaying a consistently severe level of concern around the current macroeconomic environment. Faced with high interest rates, he said that the ability for many Americans to make a monthly car payment has been and continues to be an ongoing challenge; Tesla’s goal at the moment is just to make its vehicles affordable.
Several top analysts, including Wedbush’s Dan Ives, expressed their disappointment with the results. Ives called the conference call a “mini disaster,” saying that, though his Tesla thesis is unchanged, it is now facing some challenges.
Ives slashed his price target from $350 to $310.
Shares of Tesla opened at $225.95, down more than 6%, as a result. The stock had fallen nearly 8% as of the time of writing.
And despite her incredible bull thesis for Tesla, even Cathie Wood was feeling the pressure headed into earnings.
Related: Key Tesla investors at odds with Elon Musk on one important point
Ark’s flagship Innovation ETF sold 25,908 shares of Tesla, worth more than $6 million, Wednesday, just before the company’s earnings report was released.
This latest sell-off came after the firm trimmed its top holding by nearly $7 million on Oct. 17 and $2 million the day before.
Tesla remains the fund’s top position, though the gap is narrowing between its Tesla holding, worth $635.5 million and weighted at 9.84% of the fund, and its Coinbase (COIN) – Get Free Report holding, worth $526.3 million and weighted at 8.15% of the fund.
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