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Tesla Takes the Stage - As Tesla prepares to release its earnings, investors are positioning themselves for potentially significant disclosures following a tumultuous period for the EV giant.
The company has faced a series of challenges starting from the beginning of the year, marked by a stark 43% drop in its stock value, reaching its lowest level since January 2023.
Tesla's strategy in recent times has included substantial price cuts across its flagship models and its premium Full Self-Driving (FSD) system.
These moves are seen as an attempt to boost sales and market share amidst softening demand, but they have also fueled investor concerns about profit margins and overall financial health.
The backdrop of these pricing strategies includes a concerning first-quarter performance with weak vehicle deliveries and a high-profile recall of the Cybertruck. Moreover, Tesla announced a significant workforce reduction exceeding 10%, signalling a deeper organisational restructuring.
Financial analysts are bracing for a downturn, with expectations set for a 5.1% drop in revenue. This would mark Tesla's first year-over-year revenue decline since Q2 2020.
By prioritising the robotaxi project and delaying the Model 2 launch, Tesla might encounter increased growth challenges, particularly as competition intensifies in China and from other original equipment manufacturers. The company's ability to respond to these pressures could be constrained by limited free cash flow.
Impact on Tesla's peers: Here is the historical 1-month response when Tesla misses revenue estimates:
Li Auto ADR: 5.77%
Honda Motor ADR: 5.25%
Ford: 4.99%
Rivian Automotive Inc: 3.05%
General Motors: 2.74%
Toyota Motor ADR: 2.61%
BMW: 2.57%
Volkswagen A G: 1.87%
Xpeng Inc ADR: -1.30%
Nio ADR: -2.61%