Tesla's Stock Plummets After 3Q Earnings Miss... Musk Confident in "Strong Demand" (Comprehensive)

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] American electric vehicle company Tesla recorded an 'earnings miss' in Q3 (July-September) this year, with sales falling short of market expectations. Tesla CEO Elon Musk expressed confidence, anticipating strong demand in Q4, but the market showed unease, causing the stock price to plummet.

According to Bloomberg and others on the 19th (local time), Tesla announced in its earnings report that Q3 sales reached $21.45 billion (approximately 30.76 trillion KRW), a 56% increase compared to the same period last year. However, this figure fell short of the market forecast of $21.96 billion. Earlier, Tesla's Q3 vehicle delivery figures (343,830 units), released on the 2nd, also missed the market expectation of 371,000 units.

Tesla stated that a strong dollar, bottlenecks in electric vehicle production and delivery, and high raw material and logistics costs affected sales. First, Tesla estimated the impact of the strong dollar at $250 million.

Additionally, Tesla reported that profitability declined due to rising raw material costs related to new factories in Berlin, Germany, and Texas, as well as new 4680 battery production. They also pointed out, "Logistics disruptions and supply chain bottlenecks are improving but still remain challenges." Tesla emphasized that it is working to resolve these issues.

This has led some to speculate whether market demand for Tesla electric vehicles is slowing down. Earlier, CEO Musk announced in April that the company would produce over 1.5 million vehicles this year. Tesla produced 929,910 vehicles from Q1 to Q3. To meet the target, it must produce more than 570,000 vehicles in Q4.

Tesla CFO Zach Kirkhorn expects Q4 production to increase by 50% year-over-year, but due to ongoing delivery issues, the delivery growth rate is expected to fall slightly below 50%. Bloomberg reported that Tesla has maintained a goal of an average 50% annual increase in vehicle deliveries for several years.

Elon Musk, CEO of Tesla
Photo by AP Yonhap News

However, CEO Musk emphasized to shareholders on the day, "It cannot be overstated how strong demand is in Q4 this year," adding, "The factories are running at full capacity, and every car produced is being delivered."

Addressing concerns about the macroeconomic situation, he said, "China is mostly experiencing a downturn in the real estate market, and Europe is facing an energy-driven recession," adding, "The U.S. Federal Reserve is raising interest rates more than necessary, but North America remains quite resilient. They (the Fed) will eventually realize this and lower rates again."

After Tesla released its earnings report after market close, its stock price fell more than 6% in after-hours trading. CNBC reported that since the Q3 delivery numbers were announced on the 2nd, the stock price has dropped more than 17%. Gene Munster, managing partner at venture capital firm Loup Ventures, diagnosed, "Tesla is typically a company that beats expectations, so people were somewhat surprised when sales fell short."

Meanwhile, CEO Musk indicated that a significant share buyback to boost the stock price is likely to occur next year, stating that the board is awaiting approval for a $5 billion to $10 billion share repurchase. Musk claimed that Tesla's current market value, close to $700 billion, could surpass the combined market capitalization of Apple ($2.3 trillion) and Saudi Arabia's Aramco ($2.1 trillion) in the future.

This content was produced with the assistance of AI translation services.