Tesla’s shares have suffered a significant drop of more than 15% over the past few days, closing the week at $211.99. The decline came after CEO Elon Musk expressed pessimism about macroeconomic issues during a third-quarter earnings call. While Tesla’s stock is still up 96% for the year, this marks its worst week of performance. Musk emphasized the importance of cost-cutting and price reductions for Tesla in the coming quarters, sparking concerns among investors.
During the earnings call, Musk also discussed the company’s highly anticipated Cybertruck. He tempered expectations for the unconventional pickup, stating that it would take up to 18 months before the vehicle becomes a positive cash flow contributor. Musk emphasized the need to make the Cybertruck affordable for consumers, highlighting the difficulty of the task. Furthermore, he expressed concern about the high-interest rate environment, stating that it could make it harder for people to afford Tesla’s cars.
Analysts reacted cautiously to Tesla’s Q3 results, with some issuing lower price targets for the company’s stock. Wells Fargo analyst Colin Langan commented, “No more rose-colored glasses,” while Morgan Stanley’s Adam Jonas reduced his price target to $380 from $400. Despite the decline, some long-term believers in Tesla, including Jonas, see the Q3 results as a warning sign for the broader electric vehicle market. Chinese EV makers also saw their shares decline following Tesla’s cautious call.
