After Tesla, Inc.'s
Dampened Margins: Tesla's third-quarter core margin, the auto gross margin excluding regulatory credits, came in shockingly low at 16.3%, significantly missing the consensus estimate of 18.02%, according to GLJ Research's Gordon Johnson.
The operating margin also dropped by 2 percentage points quarter-over-quarter, landing at 7.6%, with the metric anticipated to fall further due to the price cuts announced in the U.K. and U.S. in the fourth quarter.
These disappointing results came despite regulatory credits with a "100% gross margin" rising nearly 97% to $554 million, as highlighted by the analyst.
"The 50% growth mirage that many have associated with this company is now decisively over," he asserted.
Not As Positive As Expected: Johnson noted that demand for the Model 3 refresh, codenamed Highland, and the Cybertruck seemed to be significantly underwhelming. Customer deposits extended to the company for future cars dropped to $894 million in the third quarter, the lowest level since the third quarter of 2021. This is contrary to the expectations of Tesla bulls, who anticipated strong demand for these two electric vehicles.
Johnson described the Highland as an old Model 3 with new headlights. "There are NOT 10s of thousands of folks waiting for a 7yr old TSLA model with very modest upgrades as the bulls assume," he said.
He also disregarded one of the positive factors Tesla bulls have been highlighting, the growing cash balance, by pointing out that it was mainly driven by a $2.1 billion sequential increase in Tesla's debt balance. He saw no room for the company to initiate a buyback.
"We expect the euphoria surrounding the stock to quickly turn to disdain," Johnson said.
In premarket trading, Tesla stock fell 5.07% to $230.38, according to Benzinga Pro data.
