Yesterday, a frustrated Elon Musk told Tesla investors to sell the stock if they don’t believe Tesla will solve full self-driving cars. Today, Tesla's stock fell 13%, wiping out $110 billion (more than Ford and GM combined) from the company's market cap.
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Last night, Tesla released its Q2 2024 earnings report and held an earnings call with analysts, during which it discussed the company’s financial results and future plans.
On the financial front, Tesla slightly beat Wall Street's expectations, coming in slightly above the revenue and profit consensus predictions; however, once the earnings call started, Tesla’s stock started its free fall.
Today, Tesla opened the trading day lower, and after a precipitous fall, Tesla is currently trading at $214 per share, down 13% from the previous close of $246 per share.
When multiplied by the 3.18 billion Tesla shares outstanding, the 13% fall in Tesla's stock price represents $110 billion that was wiped out of the EV maker’s market cap in a single day.
If you want context into how big this loss is, $110 billion is more than the market cap of some of the biggest automakers in the world, including Ford and General Motors combined, which are valued at around $50 billion each.
Looking at the sharp decrease in Tesla's stock price, you might wonder whether something bad happened during the earnings call.
However, what’s happening to Tesla is more of death by a thousand cuts rather than a bang. Tesla had a meh earnings call, during which Elon Musk made his usual predictions, including full self-driving is just around the corner and that the Optimus robot will revolutionize the world.
We have heard Musk on this tune for the past few quarters. However, what was missing were any concrete plans to increase vehicle demand or any new technological breakthroughs Tesla has achieved.
Tesla reiterated that the company has the capacity to produce 3 million vehicles a year, which is wonderful. However, the current Tesla vehicle lineup has only been able to generate sales of 1.8 million vehicles a year.
Tesla announced plans to introduce new lower-priced vehicles built on the current platform and leverage existing factories to reach the production goal of 3 million vehicles a year.
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However, even on this front, Tesla announced a quiet delay. On the last quarter earnings call, Musk said that the new vehicles could start production as soon as by the end of this year; however, Tesla gave a more conservative timeline of “the first half of 2025.”
During the call, Tesla also announced that Giga Mexico is officially on pause. Musk blamed political uncertainties and a possible Trump Mexico tariff as the reason for the pause.
However, starting last year, suppliers selected by Tesla to provide parts to a vehicle that will be produced at Giga Mexico revealed that Tesla’s Mexico factory has been delayed to 2026 or as far back as 2027.
Other quietly announced delays included the Roadster. A few months ago, Musk said Tesla would reveal the redesigned Roadster by the end of the year. However, this time around, Musk softened his position, stating that “Roadster design is mostly complete, and we hope to be in production by next year.”
If you have followed Musk’s statements for as long as I have, you know that “we hope to be in production next year” means it’s extremely unlikely Tesla will start production next year.
If Musk says we will start production next year, it means that Tesla may start next year. Finally, if Musk gives an exact date for when something will happen, you can add a few months to arrive at the real date.
A couple of days back, I published an article listing all the delayed projects and unmet promises at Tesla that the EV maker will likely have to address at the earnings call.
Given that Tesla made no new announcements or gave the investor base something to be excited about, The tone during the earnings call was decidedly negative.
However, here is where the kicker comes in. During the earnings call, dealing with all the doubts, Musk instructed Tesla investors that they should sell the stock if they didn’t believe Tesla could solve level 5 full self-driving.
Surprisingly, as we saw on Tesla’s share price today, it appears that this is exactly what Tesla investors have done.
Despite all the negativity surrounding Tesla recently, we think that Tesla is the leader in level 5 full self-driving vehicle technology. The company’s technology and real-world driving data are unmatched.
Having said that, given Musk has been promising robotaxis are just around the corner for more than half a decade, it’s understandable some investors are starting to lose hope.
Currently, this is all the information we have regarding Tesla’s financial results; however, we’ll be sure to keep you posted when we get an update from the company.
Until then, make sure to visit our site, torquenews.com/Tesla, regularly for the latest updates.
So, what do you think? Are you surprised to see Tesla’s stock price collapse so precipitously in a single day? Also, what do you think is behind this strong negative sentiment? Let us know your thoughts in the comments by clicking the red “Add new comment” button below.
Image: Screenshot from Elon Musk’s TED YouTube interview
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Tinsae Aregay has been following Tesla and the evolution of the EV space daily for several years. He covers everything about Tesla, from the cars to Elon Musk, the energy business, and autonomy. Follow Tinsae on Twitter at @TinsaeAregay for daily Tesla news.
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