Tesla Plunges 10% Due to Production Cuts and Margin Decline... Musk Loses 26 Trillion Won in a Day

Musk "Factory Upgrade... Q3 Production Decrease"
"Sacrificing Margin to Increase Car Sales"

Tesla's stock price plunged nearly 10% on the 20th (local time). Despite posting better-than-expected results for the second quarter of this year, the stock slid as confidence in the third-quarter earnings was lacking. The Nasdaq showed a decline of over 2% due to the drop in tech stocks centered around Tesla.

[Image source=Yonhap News]

On that day, Tesla closed at $262.90, down 9.74% from the previous trading day on the New York Stock Exchange. In after-hours trading, as of 7:49 PM, it recorded an additional 0.87% drop to $260.57.

Tesla had risen to the $290 range on the 17th and was on the verge of re-entering the $300 range. However, after the second-quarter earnings announcement this year, the stock closed slightly down the previous day and then slid nearly 10% on this day.

Investor sentiment cooled as CEO Musk hinted at a production decrease in the third quarter. Earlier, during the Q2 earnings conference call held on the 19th, Musk said, "Due to global factory upgrades and factory shutdowns during the summer, we expect third-quarter production to decrease somewhat."

Tesla's margins also shrank. Although Tesla's Q2 revenue and net income this year exceeded expectations, the gross profit margin fell to 18.2%, below the market estimate of 18.8%, due to the price reduction policy continuing since the beginning of the year. This is lower than 25% a year ago before the vehicle price cuts and 19.3% in Q1 of this year when the price cuts began. The operating margin dropped to 9.6%, down 5 percentage points from a year ago, marking the lowest level in the past five quarters. CEO Musk stated, "Short-term volatility in gross profit margin and profitability is relatively minor when viewed in the long-term picture," adding, "It makes sense to sacrifice margin to sell more vehicles."

In relation to this, the securities industry placed weight on concerns over Tesla's short-term profitability decline. Mark Delaney, a Goldman Sachs analyst, predicted, "If Tesla continues its price reduction policy to expand sales volume, margin headwinds could persist in the medium term."

As Tesla's stock price plummeted, the world's richest person, CEO Musk, saw his wealth evaporate by $20.3 billion (about 26 trillion KRW) in a single day. According to the Bloomberg Billionaires Index, Musk's net worth as of the 20th was $234.4 billion (about 300 trillion KRW), down $20.3 billion. The net worth gap with Bernard Arnault, chairman of Louis Vuitton Mo?t Hennessy (LVMH), who ranks second, narrowed to $33 billion (about 42 trillion KRW).

On the same day, the Nasdaq closed at 14,063.31, down 294.71 points (2.05%), as Tesla, Netflix (-8.4%), semiconductor stocks Nvidia (-3.31%), Intel (-3.16%), and Qualcomm (-2.98%) all declined.

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