Tesla's Net Profit Drops 24%... Over-the-Counter Market Plummets 4% (Comprehensive)

by Lee Jieun

Published 20 Apr.2023 08:35(KST)

U.S. electric vehicle manufacturer Tesla's net profit for the first quarter of this year sharply declined compared to the same period last year.

According to Tesla's Q1 earnings report released on the 19th (local time), net profit was $2.513 billion (approximately 3.3398 trillion KRW), down 24% from the same period last year. Adjusted earnings per share (EPS) stood at 85 cents, slightly below market expectations ($23.21 billion).

Revenue increased by 24% year-over-year to $23.329 billion (approximately 31.0042 trillion KRW). Although vehicle sales rose due to Tesla's price cuts in Q1, net profit significantly decreased.

Tesla's Market Cap Reaches $1 Trillion Driven by Model 3 and Model Y <br>[Image Source=Yonhap News]

Tesla's Market Cap Reaches $1 Trillion Driven by Model 3 and Model Y
[Image Source=Yonhap News]

Following the net profit decline, Tesla's stock closed the regular trading session at $180.59, down 2.02% from the previous trading day. It then plunged more than 4% further in after-hours trading.

Meanwhile, on the 18th, a day before the earnings announcement, Tesla announced on its website that it would reduce the U.S. sales prices of the Model Y and Model 3 by $3,000 and $2,000 respectively. As a result, the Model Y's selling price dropped by 20% and the Model 3's by 11% this year.

Tesla appears to have made this decision anticipating a slowdown in demand due to recession forecasts and aiming to meet sales volume targets. This marks Tesla's sixth price cut in the U.S. alone this year.

To achieve its annual sales target of 2 million units, Tesla needs to record a 52% sales growth rate this year. Since Q1 sales growth was 36% year-over-year, falling short of market expectations and targets, it is expected that sales growth must exceed 52% in Q2 to Q4.

However, experts analyze that although Tesla's aggressive price cuts hurt net profit, its market dominance has likely strengthened. Tesla delivered a record quarterly high of 422,875 vehicles in Q1.

In fact, Tesla's price cuts caused other companies' stock prices to plummet. While Tesla's stock fell only 2.02% during regular trading, Rivian dropped 4.54%, Lucid 2.68%, and Nikola 6.95% respectively.