Tesla’s margins are shrinking after deep price cuts

Tesla’s margins are shrinking after deep price cuts

Electric car giant Tesla presented, on Wednesday evening, new figures for the first quarter of the year.

The big question for investors was what the company’s margins looked like in the first quarter, and whether it would give a boost to US stock markets.

Wednesday’s report shows that operating margin has nearly halved in one year, from 19.2 to 11.4 percent. The company announced in January that it would cut prices for a number of models. On Wednesday morning NST, the company cut prices again for the sixth time in the US so far this year.

The sharp drop in operating margins comes despite a promise by the company’s chief financial officer, Zachary Kirkhorn, that Tesla’s profit margins won’t fall below 20%, according to Reuters.

The company writes that they expect a continuous decrease in the cost of their cars.

— Although we cut prices on several vehicle models in the first quarter, operating margins were reduced at a manageable rate. We expect continued cost reductions for our vehicles, including improved efficiencies in production at our state-of-the-art plant and lower logistics costs,” she said.

In the quarterly report, the company wrote that it believes Tesla will continue to generate the highest profit margins in the industry.

Sharp drop in net income

The company could show a turnover of $23.3 billion, and a turnover of $23.4 billion was previously expected, according to estimates obtained by Bloomberg.

At the same time, the company delivered a result of $0.85 per share — exactly as expected. It also points to a significant decline in net income — which ended in the first quarter at $2.5 billion, a 24 percent drop from a year ago.

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During the trading day on Wall Street, the stock ended down 2 percent, and the stock traded at $180.9. In after-market trading, the decline continued, and at 10.45pm the stock was down 3.7 percent.

In the previous quarter, the fourth quarter of 2022, Tesla exceeded analyst expectations by a good margin and generated $24.3 billion in sales and earnings of $1.19 per share.

In the past year, the stock has been revised in the US Nasdaq index. Through 2022, the stock is down 66 percent, and although the results were stronger than expected, a little help. So far this year, the trend has reversed, and the stock is up more than 60 percent — however, it’s far from the peak in 2021 when the stock traded for $407.

At the time of writing, the company is valued at approximately $565 billion.

Buying Twitter is troubling

Tesla’s sharp decline in 2022 coincided with CEO Elon Musk dumping shares for another NOK 40 billion, in the wake of the very messy takeover of social media platform Twitter.

Since Elon Musk first started buying shares in Twitter in the spring of 2021, and completed the $44 billion purchase in October 2022, his fortune has fallen by more than $100 billion.

Musk has been criticized for spending too much of his time on Twitter. There have also been upheavals and changes in management, particularly alarming when Andrej Karpathy, head of artificial intelligence (AI), disappeared out of doors in July last year.(conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We’d like you to share our statuses using links that lead directly to our pages. Reproduction or other use of all or part of the Content may be made only with written permission or as permitted by law. For more terms see here.

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Dalila Awolowo

Dalila Awolowo

"Explorer. Unapologetic entrepreneur. Alcohol fanatic. Certified writer. Wannabe tv evangelist. Twitter fanatic. Student. Web scholar. Travel buff."

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