Following a Panasonic battery warning, Tesla shares fall 5%, down 18% since the Q3 earnings report

Midway through Monday, Tesla’s stock fell roughly 5% as fresh information from Panasonic, a long-time partner and supplier of battery cells, renewed worries about the slowing demand for electric cars.

Elon Musk, the CEO of Tesla, stated on the company’s Oct. 18 earnings call that the company was concentrating on cost reduction and maintaining affordable car prices for consumers despite rising interest rates.

Based on data from Ortex, short sellers of Tesla have profited more over $3 billion since the company’s third-quarter earnings call.

Following reports that Panasonic, a longstanding partner and supplier to the EV maker, had decreased battery cell output in Japan during the year ending September 2023, shares of electric vehicle producer Tesla fell as much as 5% on Monday afternoon.

Tesla
Tesla shares fall 5%, down 18% since the Q3 earnings report

 

Investor worries about a slowdown in EV demand were heightened by the updates, particularly for more expensive EVs that might not be eligible for tax reductions or other government incentives from both domestic and international programs. The Model S car and Model X SUV, which are more expensive and have been around longer, are powered by Panasonic batteries.

Elon Musk, the CEO of Tesla, warned investors during the company’s third-quarter earnings call on October 18 that rising interest rates would make it more difficult for customers to purchase or lease EVs in the future and would put pressure on Tesla to maintain the lower pricing of its vehicles.

 

During that call, Musk also stated on multiple occasions that Tesla was going to have significant difficulties when the manufacture of the eagerly anticipated Cybertruck began. “We dug our own grave with the Cybertruck,” expressed regret from the CEO of Tesla. Additionally, he stated, “I just want to temper expectations for Cybertruck,” on the Q3 call. Although the product is excellent, it will take up to 18 months for it to significantly improve cash flow.

Since the company’s October 18 earnings call, shares have decreased by almost 18%. From that day to Friday’s close, investors who sold short Tesla shares profited $3 billion, according to statistics from London-based Ortex, a provider of financial information services. According to Ortex data, as of October 27, the dollar value of short interest in Tesla was around $18.08 billion, or 3.21% of free float.

 

In a note published on Monday, Toni Sacconaghi of Bernstein stated that his company anticipates Tesla will have “lower margins and disappoint on volumes” in the upcoming fiscal year 2024. Currently, Bernstein’s price estimate for Tesla shares is $150.

Although the Street projects that Tesla will produce 2.3 million cars in 2019, a rise of roughly 500,000 over the previous year, Sacconaghi stated, “Tesla had to cut prices by about 16%, pressuring overall operating margins by 750 bps, in order to drive growth of 500K units this year.” It’s still uncertain if Tesla can reduce costs any further without running the risk of going into negative free cash flow. We think Tesla may have to predict fewer deliveries than anticipated for the upcoming year in addition to facing reduced profitability.

Elon Musk, in command of SpaceX and Tesla, made an appearance at the Viva Technology conference in the charming city of Paris on June 16, 2023. This meeting of adventurous souls and enterprising zeal was held against the colorful backdrop of the Porte de Versailles exposition site. A rich tapestry of ideas and aspirations emerged from this event, which was an ode to creativity, as startups shared their hopes for the future. Elon, the astute observer, immersed himself in the kaleidoscope of creative energy, probably reflecting on the direction of technical development and the possible beginning of novel endeavors.

 

With its pessimistic outlook for Tesla, Bernstein is projecting 2.15 million deliveries from the company in 2019 along with earnings per share of $2.59, as opposed to the average estimate of 2.3 million deliveries and $3.30 in earnings per share.

The EV market is beginning to feel more and more pessimistic. ON Semiconductor’s stock, which provides semiconductors for electric vehicles, fell 20% on Monday following the release of the company’s unsatisfactory Q4 forecast.

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