Investing.com -- Tesla (NASDAQ:TSLA) reported quarterly results that missed Wall Street estimates as its recent wave of electric vehicle price cuts weighed on margins.
Tesla shares fell 5.5% in pre-open trading on Thursday, following the release of the results.
Tesla reported adjusted EPS of $0.66 on revenue of $23.35 billion. Analysts polled by Investing.com anticipated EPS of $0.73 on revenue of $24.32B.
Gross margins excluding credits, which have been closely watched following recent price EV cuts, slowed to 16.1% in the quarter from 18.7% in Q2.
Tesla delivered 435,000 EVs in Q3, down from 466,140 in Q2, owing to upgrades at various factories, the company said. "During the quarter we brought down several production lines for upgrades at various factories, which led to a sequential decline in production volumes."
Shares reversed early after-market gains and sank after cautious commentary by CEO Elon Musk.
“I’m worried about the high interest rate environment we’re in,” he said on the call.
“If interest rates remain high or if they go even higher, it’s that much harder for people to buy the car.”
Musk later added that he "just can’t emphasize enough how important cost is…We have to make our products more affordable so people can buy it.”
Another key driver of the selloff was Musk's comments about Cybertruck.
“It is going to require immense work to reach volume production and be cashflow positive at a price that people can afford,” with the Cybertruck.
“I just want to temper expectations for Cybertruck. It’s a great product, but financially, it will take a year to 18 months before it is a significant positive cashflow contributor,” he added.
Wall Street analysts are sounding increasingly concerned about the near-term outlook for Tesla, especially after Musk's comments.
"We believe the 3Q report will add to near-to-intermediate term investor concerns given company commentary that the current macro backdrop/higher rates could gate its growth (including how quickly it ramps factories), and comments that the initial Cybertruck ramp could be slow," Goldman Sachs analysts, who lowered the price target by $30 to $235 per share, wrote in a note.
Citi analysts said the results were worse than they anticipated. They also cut the price target, going from $271 to $255 per share.
"We expect the shares to come under some pressure on these results. Tactically, we prefer staying on the sidelines pending a more convincing entry point with visible NT fundamental catalysts."
Additional reporting by Senad Karaahmetovic