Tesla’s Q3 Earnings Fall Short – Here’s What You Need to Know Dear Reader, The Wall Street Journal recently released a great article called “Automakers Have Big Hopes for EVs; Buyers Aren’t Cooperating.”
And the bottom line of the article was that electric vehicles (EV) companies have faced a slowing demand this year.
The latest example that the WSJ cited is that Ford Motor Company (F) is considering canceling a shift at the plant that builds its F-150 Lightening. Despite generous price cuts, EVs remain more expensive than internal combustion vehicles. As a result, Ford’s EV sales plummeted a whopping 48.5% in the third quarter.
A lot of the big vehicle companies just don’t want to raise production, and they’re canceling their EV plans.
Ford recently paused its plans to build a CATL battery plant, which is the biggest, most efficient battery manufacturer in China. General Motors Company (GM) also just postponed converting its Orion plant to make electric pickups. A lot of this is demand driven. Ford is switching to more hybrid vehicles, and GM might have to do the same thing, too.
But Ford and GM aren’t the only auto makers struggling to sell their EVs… This week, we learned that Tesla, Inc. (TSLA) is also having some problems after it released its third-quarter earnings report Wednesday afternoon.
So, in today’s Market 360, let’s dive into the details of Tesla’s third-quarter earnings report. Then, I’ll share how you can access a new system to ensure that you’re investing in winning stocks. Tesla Misses On the Top and Bottom Lines For the third quarter, Tesla’s $0.66 per share, down from earnings of $1.05 per share in the same quarter a year ago. Revenue rose nearly 9% to $23.35 billion, up from revenue of $21.45 billion a year ago.
The analyst community anticipated earnings of $0.73 per share and revenue of $24.1 billion, so Tesla posted a 9.6% earnings miss and a 3.1% revenue miss. This was the first time that the company missed on both earnings and revenue since its second-quarter earnings report in July 2019. The company also reported thinner profit margins, which fell 7 % year-over-year to 17.9%.
Tesla’s stock dropped 9% on Thursday following the earnings results.
Tesla CEO Elon Musk confirmed the EV maker is struggling to sell more vehicles due largely to higher interest rates, as well as lower operating margins due to price cuts. During the company’s earnings call, Musk commented: I’m worried about the high interest rate environment we’re in… If interest rates remain high or if they go even higher, it’s that much harder for people to buy the car… We have to make our products more affordable so people can buy it. Musk also confirmed that Cybertruck sales would commence in late November, but signaled that Tesla’s ambitious truck will not be profitable for at least 18 months. Wanting to “temper expectations,” Musk cautioned that “it is going to require immense work to reach volume production and be cashflow positive at a price that people can afford.”
Interestingly, Tesla has not confirmed the price of its Cybertruck yet; but I expect it to be a big hit – largely because it’s an odd and very imposing vehicle, as you can see from the image below. 
Overall, Musk confirmed that Tesla was very cautious on just about everything… except its artificial intelligence business. Tesla Dives Into AI With “Dojo” In regard to AI, the company stated in its earnings report that it has “commissioned one of the world's largest supercomputers to accelerate the pace of our AI development.” This supercomputer is called “Dojo.” Dojo is used to train Tesla’s AI model, which is incorporated into all the company’s self-driving efforts. It’s designed to train AI systems using video clips and data from its customers’ vehicles to complete complex tasks, like assisting Autopilot, Tesla’s driver-assistance system.
This past July, Musk said that the company “will be spending well over $1 billion on Dojo” over the course of 2024, which is when the supercomputer is expected to be fully ready.
So, it seems that AI will be an integral part of the company’s future.
And speaking of AI and the future…
I believe that AI will also help give folks an edge on investing.
It will help determine who makes the most money going forward in the markets… and who will be left behind.
So, I’ve decided to combine AI with my own proprietary stock-picking system – and redefine what it means to be a short-term trader – in a system called the New Intelligence.
The New Intelligence is an AI system that can predict the share price of almost any stock 21 trading days into the future… with up to 82% accuracy. Essentially, it will show you the best course of action for every single stock you search.
It’s the idea of giving yourself a tiny advantage… and then amplifying that advantage… on one short-term move after another until you’ve built a crushingly superior portfolio.
If you’d like to learn more about exactly how the New Intelligence works – and how I’m combining it with my own system to create the ultimate trading strategy – click here. Sincerely, |
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