Tesla’s (TSLA) much-anticipated quarterly earnings report triggered a sharp 7% drop. Before that, buyers accumulated TSLA stock, betting that revenue from its EV charging stations would expand its multiples.
Although revenue will rise in the long term, the near-term risks spooked Tesla shareholders. Volume soared to 173 million shares on July 20. The company issued a profit margin warning for the back half of the year. To combat weakening demand, higher competition, and higher supply, Tesla is willing to cut prices.
Tesla posted operating margins falling to 9.6% in Q2, down from 11.4% in Q1 and below 14.6% a year ago. Two years ago, the GAAP operating margin was 20.8%. The weaker economy and an influx of EV makers are pressuring the firm.
Catalysts
Tesla has multiple strong catalysts that may end last week’s sell-off. First, Ford (F) and GM (GM) are among the firms adopting Tesla’s EV chargers. This increases revenue from idle charging stations. Second, the firm will strike licensing deals for its full self-driving software.
Tesla failed to achieve FSD so far.
Third, Cybertruck, despite its unattractiveness, will compete with Rivian’s (RIVN) truck and Ford’s F-150 Lightning. This increases Tesla’s addressable market.
