Tesla shares dropped by over 10 percent on Thursday, resulting in a substantial reduction in the company’s value. This occurred after CEO Elon Musk, on the company’s earnings call, failed to address concerns about the slowing growth and continuous price reductions. The electric vehicle company implemented significant price cuts to stimulate demand in 2023, leading to a 38 percent increase in vehicle deliveries. However, this did not produce a proportional growth in revenue, prompting unease among investors and analysts. Tesla’s quarterly results, released on Wednesday, fell short of analysts’ expectations, with only a three percent increase in annual revenue despite a substantial rise in sales volume. The company also forecasted a potentially “notably lower growth rate” for 2023, as it plans to invest in a next-generation vehicle scheduled for production in 2025. Elon Musk, the CEO, is seeking increased control over the company after selling off a significant portion of his Tesla stock to finance his investment in Twitter in 2022. Musk informed investors that Tesla is currently positioned between two significant growth phases. He mentioned the upcoming release of a new version of the driver-assistance system and progress towards the development of a new vehicle. Despite high expectations, the company’s executives failed to address short-term concerns during the earnings call, according to Dan Ives, a tech analyst with Wedbush Securities. Ives expressed disappointment in the lack of strategic and financial insight into the ongoing price cuts, margin structure, and fluctuating demand. He criticized the call, describing it as a “train wreck” and highlighted concerns over Tesla’s diminishing margins and continuous price reductions. Gene Munster, managing partner of Deepwater Asset Management, commented on the company’s guidance, stating it was the most sobering he had seen from Tesla. Musk also faced inquiries about his public demand for 25 percent of the company’s voting shares, where he cited the need to resist activist investors who might have differing ideas on how to manage Tesla.
