Tesla Dips on Mixed Earnings Report, S&P 500 and Nasdaq 100 on Weak Footing

TESLA EARNINGS KEY POINTS:

• Tesla reported mixed results on Wednesday
• Third-quarter EPS clocked in at $1.05 on revenue of $21.45 billion. Analysts were looking for earnings per share of $1.01 on sales of $22.09 billion
• TSLA shares slumped in post-market trading on disappointing top-line figures

Most Read: S&P 500, Dow Jones and Nasdaq 100 Technical Outlook for the Days Ahead

Tesla’s shares (TSLA) slumped as much as 5% in extended trading after the company announced somewhat disappointing financial results, missing bottom line and margin estimates. According to the electric automaker, third-quarter total revenue rose 56% year-over-year to $21.45 billion, but fell short of sales expectations of $22.09 billion. Adjusted earnings per share, meanwhile, came in at $1.05, versus the market consensus of $1.01, a modest beat. Last but not least, automotive gross margin stood at 27.9%, slightly below the 28.4% forecast, a sign that profitability is suffering amid elevated input costs.

TESLA’S RESULTS AT A GLANCE

Adjusted EPS: $1.05 vs. $1.01 per share expected, according to Bloomberg

Revenue: $21.45 billion vs. $22.09 billion expected, according to Bloomberg

Automotive Gross Margin: 27.9% vs. 28.4% expected, according to Bloomberg

In terms of the outlook, Tesla’s maintained its previous guidance, indicating that it plans to grow manufacturing capacity and that it expects to achieve 50% average annual growth in vehicle deliveries over a multi-year horizon. Despite the constructive forward-looking commentary, it is uncertain whether the company will be able to achieve its ambitious goals due to rising headwinds, including weaker demand and higher interest rates.

Futures on the S&P 500 and Nasdaq 100 added more losses following the release of TSLA’s numbers, with many tech names underperforming in the after-hours session on fears that the economic landscape is turning gloomier for U.S. businesses. With earnings season failing to build sustainable upside momentum, the path of least resistance may be lower for most stocks, suggesting that the main equity benchmarks could soon be on their way to retest their 2022 lows and even break below those levels under the worst-case scenario.

Looking ahead, there is no high-impact data on the U.S. economic calendar on Thursday, so the current earnings season will remain in focus. Several key companies will release their results tomorrow, but reports from Union Pacific (UNP), AT&T (T), Freeport-McMoRan (FCX) and Snap (SNAP) will likely receive the most attention as traders look to gain insight into business trends across key industries for the stock market.

TSLA REACTION TO EARNINGS REPORT

Tesla’s Chart Prepared Using TradingView

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—Written by Diego Colman, Market Strategist for DailyFX