Shares of Tesla slumped sharply following the company’s earnings report and conference call Wednesday, Oct. 18. The company’s stock dipped more than 6% in after-hours trading amid an earnings miss and macroeconomic fears cited by CEO Elon Musk.
Tesla (TSLA) – Get Free Report reported adjusted earnings of 66 cents per share, well below Street expectations of 73 cents per share and down 37% from the year-ago period. Tesla also reported that its key gross margins, news of which analysts were anxiously awaiting, fell to 17.9%, down from the 25.1% the company recorded last year.
Despite a delivery miss in the third quarter, Tesla reiterated its goal of 1.8 million deliveries by the end of the year.
The theme of this quarter’s conference call, however, revolved around Musk’s severe macroeconomic concerns.
“Interest rates have to come down,” he said. “If interest rates keep rising, you just fundamentally reduce affordability. It’s just the same as increasing the price of the car.”
A higher for longer rate environment, he said, severely hurts people’s ability to make monthly payments on a car. As a result, making these cars affordable is foremost on his mind.
“I don’t want to be going top-speed into uncertainty,” Musk said. “I’m not saying things will be bad. I’m saying they might be.”
Musk contended that if a Tesla cost the same as a Toyota (TM) – Get Free Report Rav4, “nobody would buy a Rav4.” He noted that the reality for most people is living paycheck-to-paycheck in an environment of rising credit card debt.
And in this effort to sell an affordable EV in an environment that is marked by these high interest rates, Musk seems to think the remote work culture is somehow to blame.
Related: Key Tesla investors at odds with Elon Musk on one important point
“I’d say it sort of correlates with the ‘why doesn’t everyone work from home’ crowd. This was like some real Marie Antoinette vibes from people that say ‘Why isn’t everyone working from home?’ What about all the people that have to come to the factory and build the cars? What are you talking about you … I mean, how detached from reality does the work-from-home crowd have to be while they take advantage of all those who cannot work from home?
“Why did I sleep in the factory so many times? Because it mattered. We have to make our cars more affordable so people can buy it.”
Shares of Tesla fell 7% in pre-market trading.
Get investment guidance from trusted portfolio managers without the management fees. Sign up for Action Alerts PLUS now.
