Tesla (NASDAQ:TSLA) shares dove as much as 15% after a worse-than-expected loss and yet another major management change cast fresh doubts on the EV maker’s future.
Despite delivering a record number of vehicles in Q-2 Tesla lost $1.12 a share, a bigger deficit than any analyst projected.
While CEO Elon Musk, 48 anni, is hoping to earn a profit in the 3 months ending in September, he told shareholders he will prioritize other goals. Heard that story before, yes?
Then, Mr. Musk dropped a bombshell about a senior executive role change on a Tesla earnings call.
Co-Founder JB Straubel, 43 anni, who has been with Tesla since before the billionaire CEO joined the board 15 years ago, is leaving the CTO job and becoming an adviser.
The weak results and Mr. Straubel’s step back risk undermining Mr. Musk’s bid to sustainably make money building and selling EV’s. Tesla’s stock fell to as low as $230.80 shortly after the open of regular trading and is down about 31% YTD, deep in Bear territory.
The earnings miss is calling into question the path to profitability from here. Tesla is counting on selling more lower-priced M3’s to make money, but that the car “may be structurally unprofitable.” The company is challenged, and will always be a niche player say, UBS in a note.
In a letter to shareholders, Mr. Musk said he’s still aiming for positive third-quarter earnings, but will focus on delivering more cars, expanding capacity and generating cash. On the conference call with analysts, the CEO said he expects to be “probably around break-even this quarter, and profitable next quarter.”
Mr. Straubel has overseen Tesla’s energy business, its Supercharger network and its battery plant in Nevada.
He stressed that he’s not “disappearing,” and Mr. Musk immediately announced a replacement. Drew Baglino, the vice president of technology who appeared on stage with Messrs Musk and Straubel at Tesla’s annual shareholder meeting in June, will take over.
Tesla’s automotive gross margin shrank to 18.9% in Q-2 from 20.6% in the year-earlier frame.
Mr. Straubel is probably the 2nd-most important person at Tesla investors are concerned and according to the filings he sold about $30-M in stock before the call.
Mr. Musk is eyeing an end-of-year start date for production in China and wrote in the letter to shareholders that the largest auto market in the world “poses a strong long-term opportunity.”
“It is difficult for people to really feel an exponential,” Mr. Musk said on the call. “Tesla is expanding at an exponential rate.”
Note: The sector analysts are finding him hard to believe anymore.
HeffX-LTN’s overall technical analysis for TSLA is Neutral to Bearish with our Key indicators flashing Very Bearish in here.