In a Single Day, Tesla's Market Value Plummets to That of Ford's

On Thursday, Tesla experienced its biggest drop in stock price in over three months following the release of their quarterly earnings report. Although the report met the expectations of industry analysts in terms of revenue and profit, it raised concerns among investors about the company's ability to deliver the substantial profits that were anticipated under the leadership of Elon Musk.

On Tuesday, Elon Musk was present at a convention held in Miami.

While the sales and earnings per share of the company were as expected for the first quarter of 2023, the report revealed worrying signs for Tesla's financial standing. The report indicated an alarming 80% decrease in free cash flow and a 41% decrease in operating margin when compared year-over-year.

Tesla's shares experienced a significant decline of 9.8% on Thursday, marking its worst performance since January 3. This resulted in a massive loss of $51 billion in market value.

This surpasses the combined market capitalization of Ford and General Motors, which amounts to $47 billion. These two car companies are Tesla's largest rivals in the United States.

The market value of Tesla is about 10 times more than that of Ford and General Motors, totaling $511 billion.

According to Bernstein analyst Toni Sacconaghi, Tesla had a not-so-good quarter, which was "disappointing". In a recent note to clients, the analyst reduced his projected annual earnings for Tesla by over 20%. He also kept his price target at $150, indicating that Tesla's shares might fall by 17% from their closing price on Wednesday.

Sacconaghi described how Tesla recently lowered the prices of their cars for the sixth time this year. This decision is causing harm to their profitability, and they will face challenges trying to keep up with their competitors in a very competitive automotive market.

anxiously concerned about when it comes to Tesla. Some investors may have hoped for a rosy outcome, but the reality is that margins are a sensitive matter that need to be addressed. This has led to Wedbush analyst Dan Ives lowering his price target for Tesla shares from $225 to $215. He recognizes that while there may be short-term setbacks on margins, it's all part of a bigger plan to meet long-term demand. Investors are watching closely to see how Tesla will navigate this issue.”

Mostly in agreement with... yet, it is important to handle this story in a cautious manner in the forthcoming months.

During Wednesday's earnings call, Musk dismissed worries about profit margins, stating that increasing production and expanding the company's fleet would be a better decision than maintaining a smaller volume for higher margins. He further explained that the company plans to augment its margin in the future by perfecting its autonomous driving technology.

Over the past three years, investing in Tesla has been quite turbulent. The stock rose over 600% between the beginning of 2020 and the end of 2021, but then plummeted more than 75% by the close of 2022. Tesla came out with exceptional earnings results last quarter, delivering a total of 423,000 cars. Today is a significant day for Tesla investors because the stock has typically seen an average increase or decrease of almost 6% on the day following their last ten earnings reports.

On Thursday, it is estimated that Musk's net worth decreased by a whopping $11.4 billion, making it the biggest daily drop of any billionaire. Currently, he is worth $174 billion, which is significantly less than the richest man in the world, LVMH chairman Bernard Arnault, whose worth is $65 billion more. However, Musk is still richer than the next richest American, Jeff Bezos, by approximately $50 billion.

Tesla surpasses forecasted revenue, yet experiences a decrease in stock value following the release of their earnings report.

Check out the following information on Tesla's stock performance following its past 10 earnings reports, as reported by Forbes.