Tesla Shares Drop In Pre-Market After Missed Q3 Earnings

Topline

Shares of electric carmaker Tesla fell nearly 5.5% in pre-market trading early on Thursday after the company missed revenue expectations in its third-quarter earnings report released a day earlier.

Key Facts

Early on Thursday morning, Tesla shares were trading at around $209, down from $222 when markets closed on Wednesday afternoon.

Tesla reported total revenue of $21.45 billion for the third quarter, falling short of analyst estimates of $21.96 billion.

The slump in Tesla shares comes after CEO Elon Musk optimistically claimed during the earnings call that the electric vehicle maker has the potential to be worth more than Apple and Aramco—two of the most valuable companies in the world—combined.

Calling the company “recession resilient,” Musk added that he expects the company will continue to grow annual vehicle deliveries by 50% “as far into the future as we can see.”

On his earlier promise that Tesla’s self-driving technology will be fully operational by the end of this year, Musk on Wednesday’s call acknowledged that he does not expect the feature to receive regulatory approval in 2022.

Tangent

The slump in Tesla’s stock also comes at a time when its billionaire CEO is attempting to complete a high-profile acquisition of Twitter. In an unexpected u-turn earlier this month, Musk announced he will follow through with his original $44 billion offer to acquire the social media company, after trying to terminate the deal earlier. On Wednesday’s earnings call, Musk acknowledged he was “obviously overpaying for Twitter right now,” but stated the platform’s long term potential was “an order of magnitude greater than its current value.” Musk has previously indicated he wants to turn Twitter into his vision of a “super app” called X. So-called “super apps” or “everything apps” are ones that offer multiple functions to its users including messaging, social media, e-commerce, digital payments and ride-hailing services, among other things.

Key Background

Tesla’s share price has declined by more than 40% since the start of this year, performing worse than the Nasdaq index as the company has faced supply chain disruptions both in China and Germany. The stock has also been impacted by the drama surrounding Musk’s acquisition of Twitter, raising concerns among investors that the billionaire may have to sell more Tesla shares to finance the deal.

Forbes Valuation

We estimate Musk’s current net worth to be $219.3 billion, making him the richest person in the world.

Further Reading

Tesla Stock Drops After Missing Revenue Expectations (Forbes)