TSLA stock is taking a major hit as shares of Tesla Inc (NASDAQ:TSLA) are down double-digit following worse-than-estimated losses in the second quarter.
Quarterly Loss Spooks Investors
Electric car manufacturing major Tesla has started the year badly when its delivery numbers plummeted. Lately, the company brought a lot of cheer to its investors after it reported a record number of deliveries in the second quarter this year. However, all that seems to have been undone as its results for Q2 2019 proved to be a disappointment yet again, due to expectation-defying losses and the departure of another key executive.
Tesla reported losses of $1.12 per share for the quarter, and that is much worse than the estimate of the most pessimistic analyst of a loss of 396 cents a share. Another loss came at the more personal level when Tesla Chief Executive Officer Elon Musk then announced that J. B. Straubel, who had been the company’s co-founder, is going to step down from his post as the Chief Technology Officer.
Considering the fact that Straubel had been at the company even before Musk had joined Tesla, it came as a shock to many. Straubel will now act as an advisor to the company. The losses and the change in the role of a key executive sent Tesla shares plummeting.
TSLA stock fell as much as 14.30% at $227.10 in morning trade in the United States.
Musk has said that he hopes the company will be able to generate some profit in the period that ends in September. However, the market does not seem to think so after the worse than expected losses in the quarter.
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The company reported quarterly delivery and production figures of 95,356 and 87,048, respectively. Earlier this month, the company said in a preliminary release that those numbers were 95,200 and 87,048, stating that they might increase.
The record deliveries in the second quarter were driven by the company’s ambitious initiatives in China and Europe. However, many analysts believe that it will be tough for the company to dominate overseas markets.
Analysts believe that the combination of record deliveries and worse than expected losses is an indication that Tesla will find it hard to replicate its sales model in the United States in other markets. In other markets, there are established electric car markers that probably enjoy the support of the local customer base.
Despite today’s fall, TSLA stock is still up 29% since early June.
Featured image: DepositPhotos © sergio_pulp
