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Elon Musk's Tesla Shares Edge Higher Ahead Of Q1 results;Company Struggles Amid Layoffs And Price Cuts
Elon Musk's Tesla stocks sees a rise ahead of the electric car maker's first quarterly results.
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Tesla shares have dropped more than 40 per cent year-to-date as Elon Musk's EV giant has struggled
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The company saw layoffs and product discounts in the last few months
Tesla's shares moved up slightly ahead of the electric vehicle (EV) maker's first-quarter earnings on Tuesday, which experts were anticipating to show the lowest gross profit margin in over six years. Year-to-date (YTD), shares have fallen 43% as Elon Musk's electric vehicle (EV) company has struggled with staff layoffs and pricing reductions to attract customers in recent months.
Tesla shares rise ahead of quarterly results
The stock was up 0.7% at $143 in premarket trade ahead of the Q1 earnings announcement, which is anticipated after the closure of trading. During the conference call following the results, investors are expected to grill CEO Elon Musk about the status of the so-called Model 2, a low-cost car he had stated in January would go on sale in 2025.
To further reduce margins, it revealed over the weekend the most recent in a string of worldwide price reductions for the Model 3, Model Y, and more models. Half of what was previously predicted has been reduced to 52 cents per share in first-quarter earnings over the last 12 months.
Expectations on Tesla's Q1 results
Musk has previously stated that the company will reveal its Robotaxi in August, but he has not provided any details about the plans for the less expensive car. Bloomberg reports that it's possible that Tesla won't completely discontinue the less costly car—rather, it would just put a hold on production.
But at a time when the firm is already dealing with sluggish growth, narrowing margins, and declining sales, investors' anxiety is growing over Tesla's approach. The carmaker revealed earlier this month that deliveries had decreased by 8.5% while inventories had increased, the biggest surprise to experts in at least seven years.
Bloomberg data shows that over that period, the revenue projection, which is currently anticipated to be approximately $22.3 billion, was slashed by 22%, and the estimated free cash flow fell by 70% to about $654 million. Comparing the Tesla stock to the other tech stocks in the group known as the Magnificent Seven, it is much more costly at around 47 times forward earnings.
On the other hand, the unpleasant sensation has established a low bar, which may lead to a relief recovery. Currently, Tesla stands among the S&P 500 index's poorest performers. After years of double-digit growth, several analysts predict that Tesla's annual deliveries will drop for the first time in 2024. The business signaled in January that price reductions alone would not be enough to increase demand by announcing that delivery growth would be noticeably slower this year.
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