Despite indications of explosive growth ahead, Tesla Inc. stock declined by 2.89% before the market opened on Thursday. This decrease occurred after the company missed Wall Street’s quarterly earnings per share (EPS) expectations.
Fourth Consecutive EPS Miss
Tesla reported third-quarter revenues of $28.095 billion, representing a 12% year-over-year increase and surpassing the Street’s consensus estimate of $26.239 billion. However, the company’s EPS of 50 cents fell short of the Street’s estimate of 54 cents, marking the fourth consecutive miss on expectations. This shortfall was partly due to tariff and research costs, as well as a decline in income from regulatory credits.
The company’s operating income saw a significant drop of 40% year-over-year to $1.6 billion, with an operating margin of 5.8%.
Mixed Wall Street Reactions
Analysts have expressed mixed reactions to Tesla’s performance. Gene Munster, managing partner at Deepwater Asset Management, highlighted Tesla’s balance sheet strength, noting that its cash and liquidity increased by $4 billion during the quarter to $41 billion. Meanwhile, Wedbush analyst Dan Ives called this the company’s “golden chapter.”
However, concerns have been raised about Tesla’s strategic focus. Ross Gerber, co-founder of investment firm Gerber Kawasaki, believes that Tesla’s shift away from EVs could be a strategic error for the company. Despite this, his firm still holds over $80 million in Tesla stock for clients.
Gary Black, managing director of Future Fund LLC, also expressed concerns about Tesla’s future, stating that CEO Elon Musk’s comments about the future did little to boost investor confidence following the mixed Q3 earnings report.
Key Metrics Denote Strength
Despite the mixed reactions, Tesla’s key metrics denote strength. The company holds a momentum rating of 92.39%, a growth rating of 76.06%, and a quality rating of 73.72%. These ratings are based on the company’s historical earnings and revenue expansion across multiple timeframes, prioritizing both long-term trends and recent performance.
Outlook
Tesla’s performance has sparked a debate among analysts about the company’s future prospects. While some are optimistic about the company’s growth potential, others have raised concerns about its strategic focus. As the company continues to navigate the evolving electric vehicle market, it remains to be seen how Tesla will address these concerns and achieve its growth ambitions.