Tesla Inc. has reported its biggest revenue quarter in history, yet the company’s stock is on track for its worst weekly performance since March 2020. As of 2 p.m. on Friday in New York, shares were down approximately 19%, trading near $308.
Weekly Losses
The last time Tesla experienced a weekly loss of this magnitude was in the week ended March 20, 2020, when the stock fell 21.8% due to the pandemic’s impact on the global economy.
Second-Quarter Revenue and Earnings
- Revenue: $28.24 billion, representing a 26% increase from the previous year and surpassing analyst expectations of $25.71 billion.
- Adjusted Earnings: 33 cents per share, falling short of the estimated 51 cents per share.
The Spending Gap
The significant decline in Tesla’s stock can be attributed to the company’s increased spending. Key highlights include:
- Operating Margin: Down to 1.4% from 4.1% a year ago, indicating a substantial decrease in the amount left over from each sales dollar after accounting for production and sales costs.
- Capital Expenditure: Expected to exceed $25 billion this year.
- Free Cash Flow: Turned negative due to significant investments, leaving the company with less cash on hand.
Market Performance
The combination of record-breaking revenue and increased spending has led to a decline in investor confidence, resulting in Tesla’s stock plummeting to its worst weekly performance in over two years. As the company continues to navigate its investment strategy and spending, it remains to be seen how the market will respond in the coming weeks.