Wall Street Analyst Talks Tesla

Wall Street Analyst Talks Tesla

  • Tesla reported third-quarter earnings on Wednesday.
  • The automaker did not have good news to report, falling short of revenue forecasts.
  • One Wall Street analyst referred to the accompanying earnings call as a “mini disaster.”

Tesla’s third-quarter earnings call was a “mini disaster,” as one Wall Street analyst put it.

On Wednesday, the EV market leader missed financial estimates and investors said they expected Tesla’s executives to share more details on the potential for further price cuts and profit margins.

But during a conference call with investors, CEO Elon Musk took on a cautious tone when talking about Cybertruck delivery, the timing of future products, and waning customer demand — sending shares sinking.

“In a nutshell we would characterize last night’s conference call as a “mini disaster” as the Street wanted to get their arms around the falling margins and constant price cuts seen globally,” Wedbush Securities analyst Dan Ives said in a note on Thursday, “but instead we heard from a much more cautious Musk which focused on a higher interest rates, FSD/AI investments, and highlighting the difficult path for Cybertruck production over the next 12 to 18 months.”

Contrary to his often-ambitious business projections, Tesla leaders had several warnings for investors listening in.

As for the upcoming Cybertruck, which is set to have a long-awaited delivery event on November 30, Musk warned production will be harrowing and said the vehicle won’t see a positive cash flow for 12 to 18 months. He wanted to “temper expectations” for the vehicle despite hyping it for several years now.

“We dug our own grave with Cybertruck,” Musk said.

New Tesla CFO Vaibhav Taneja also mentioned cost-cutting efforts amid expensive ongoing factory upgrades, the ramp of the Cybertruck, and unpredictable macroeconomic factors.

Given all of that uncertainty, some analysts anticipated Musk also would end the frequent and substantial vehicle price cuts Tesla’s had throughout this year.

But Musk said nothing to assure investors, saying, “I think that there’s very significant price elasticity. I mean to be totally frank, if our car costs the same as a RAV4, nobody would buy a RAV4, or at least they’re very unlikely to.

“I just can’t emphasize again how important cost is,” Musk added. “It’s not an optional thing for most people. It is a necessary thing. We have to make our cars more affordable that people can buy it.”

The ambiguity about pricing concerned Wall Street analysts like Ives.

“That is a big problem and overhang for the stock in the near-term,” Ives wrote Thursday, noting the firm remains bullish but that patience was starting to wear thin. “Tesla left open the door for more price cuts ahead as Musk discussed a challenging macro environment with high interest rates that has clearly created a Rubik’s Cube backdrop for Tesla to navigate with consumers.”

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