It's a 'Vulnerable Time' for Tesla Stock After Its Latest Earnings Report
Key Takeaways
- Tesla stock sank Thursday after the EV maker’s second-quarter results came in short of estimates on Wednesday.
- Analysts said this is a “vulnerable time” for Tesla, and expect consensus estimates for the EV maker’s performance this year to come down.
- The shares have lost about one-quarter of their value this year.
Tesla (TSLA) shares tumbled Thursday, in the wake of a lackluster second-quarter earnings report.
The electric vehicle maker’s revenue and profits both declined for a second straight quarter, according to results posted Wednesday, as Tesla has seen sales decline in key markets like the U.S. and China. The stock, which has lost about one-quarter of its value this year, was down close to 9% in recent trading.
Data from California and the European Union illustrated the pressure on Tesla’s EV business. Tesla sales declined nearly 40% year-over-year in the EU for June, according to recent figures, while more than 20% fewer new Teslas were registered in California in the second quarter than at the same time a year earlier.
Musk said Wednesday that Tesla could face a “few rough quarters” as the Trump administration axes electric vehicle tax credits later this year. The credits made EVs more affordable to a wider range of consumers, so Tesla could see demand fall after they go away, though Musk said he expects demand to once again improve once Tesla has more advanced self-driving software to sell along with its cars.
“We are entering a vulnerable time for Tesla, as near-term headwinds, like auto and energy demand, subsidy cuts, and tariffs, pressure financials in the crucial transition to the long-term vision of real-world AI and higher-margin products like robotaxi and optimus,” William Blair analysts said in a Thursday note. The analysts recently downgraded Tesla stock.
JPMorgan analysts, who have a Street-low $115 price target, said Thursday that they “remain highly cautious” on Tesla’s valuation as they expect analysts to reset estimates as Tesla continues to fall short of Street expectations.
This article has been updated since it was first published to reflect more recent share price values.