Tesla stock (TSLA) has gone downhill in the wake of a shaky earnings release last week.
The EV player has seen its stock tank about 18% to $154 since its first-quarter earnings release on April 19.
The share price slide has wiped out about $87 billion in market capitalization for Tesla. Tesla’s market has dipped below the $500 billion mark, currently resting at $487 billion, per Yahoo Finance data.
Year to date, Tesla’s stock is still up 24%, compared to a 5.6% advance for the S&P 500.
Investors are probably locking in on several issues that have swirled around Tesla in recent days.
The initial is a bad first-quarter gross profit margin miss. Wall Street pinned the blame on Tesla’s steady drumbeat of price cuts in the quarter.
“Let’s call it like it is: Tesla delivered mixed results with solid demand metrics, but the elephant in the room is softer margins,” Wedbush analyst Dan Ives said in a note to clients.
CEO Elon Musk did little to stem margin concerns on the earnings call. Musk and his CFO, Zach Kirkhorn, leaned into a philosophy of wanting to move more EVs, even if that means cutting prices further and pressuring margins.
Wall Street was having none of it, coming out with cautious takes and downwardly revised profit estimates.
“Although both technology and execution risk seem substantially less than was once feared, expansion into higher volume segments with lower price points seems fraught with greater risk relative to demand, execution, and competition,” JP Morgan analyst Ryan Brinkman wrote in a client note.
Brinkman reiterated an Underweight rating on Tesla’s stock (sell equivalent).
Meantime, General Motors (GM) stood up a strong first quarter on Monday despite Tesla’s price cuts.
The Detroit-based auto giant touted market share gains in EVs. It also detailed plans to double EV production in the second half of this year as it eyes taking away more of Tesla’s dominance.
GM’s CFO Paul Jacobson told Yahoo Finance Live (video above) that Tesla’s price cuts aren’t hurting demand for its EVs.
“Our pricing strategies remain consistent, and we think that’s the right way to go. Our consumers have spoken with the orders that they’ve placed for our EVs, and we’re focused on meeting that demand across the board,” Jacobson said.
Brian Sozzi is Yahoo Finance’s Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations or anything else? Email brian.sozzi@yahoofinance.com
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Source: finance.yahoo.com