Last update - 19 October 2023 By James Woods

While not a current holding within any of the portfolios, Tesla often appears within our portfolios and commands attention from investors.

The electric vehicle maker overnight announced third-quarter results, with investors reacting negatively after several key estimates were missed. Shares are down by 9.36% in after-hours trading following the announcement. 

The major concern comes from Tesla’s third-quarter performance where the adjusted earnings per share (EPS) was $0.66, falling short of last year’s $1.05 and estimates of $0.74. The reported revenue was $23.35 billion, an 8.8% increase year-over-year (y/y) but still not meeting the estimated $24.06 billion. 

A substantial reduction in free cash flow, which plummeted by 74% y/y to $848 million, was far below the anticipated $2.59 billion. Gross margin figures also waned, standing at 17.9% versus 25.1% from a year ago, slightly below the forecasted 18%. 

A significant portion of the earnings discussion centred around Tesla’s Cybertruck. Originally slated for release two years ago, Tesla confirmed that the long-anticipated Cybertruck would be launched on November 30. However, CEO Elon Musk curbed enthusiasm, warning that the vehicle might not be a substantial contributor to positive cash flow for at least another 18 months. He expects a probable annual shipment of 250,000 Cybertrucks, but not before 2025. 

In other announcements, Tesla confirmed the Cybertruck deliveries are on track for later this year, with a focus on investing in research and development and capital expenditure. The firm also commented on progress with its AI training for robotics and the Model Y output from Texas and Berlin, which will see gradual growth. 

Tesla has had a challenging quarter, missing several estimates, and while the company assures investors of its strategies for growth and efficiency improvements in the coming quarters, investors are certainly reacting negatively to the results which will likely translate into share price weakness in the short-term.  

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