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Why is Tesla’s share price crashing?

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The world's biggest electric car maker released its Q3 financial results - they fell short of expectations.

  • Tesla's share price dropped over 4.5% after its Q3 financial results failed to impress.
  • The company faced rising costs, dropping sales prices and a decrease in profits thanks to price reductions and currency exchange rate volatility.
  • Despite financial challenges, Tesla maintains its dominance in the electric vehicle market with a 50% market share in the US.

Tesla Inc. (Nasdaq: TSLA) has released its financial report for the third quarter of 2023 and it's fair to say that it hasn't been the best three months for the electric vehicle (EV) giant.

Rising costs and falling sales prices, primarily as a result of ongoing, successive price reductions, appear to have weighed heavily on the EV maker.

The results saw Tesla's share price plummet more than 4.5% on October 18 to close at US$242.68.

Once a member of the trillion dollar market club, today Tesla's market value is a far cry from where it once stood. At present, the market capitalisation lies around the US$760 billion mark.

Why did Tesla miss on earnings?

In the third quarter of 2023, Tesla made $23.4 billion in revenue -- 9% more than what they made during the same period last year.

But while they sold more electric cars this quarter compared to the same time last year, actual profit figures shrunk by 22% and their overall earnings after expenses fell by 44%.

One of the reasons for this is Tesla's decision to cut vehicle prices on the back of growing global competition.

Additionally, Tesla mentioned that volatility in currency exchange rates also cost them around $400 million.

Needless to say, the company led by billionaire Elon Musk will have some work to do in the last three months before Q4 results come out.

Despite the results, the company has reaffirmed its commitment to achieving the year-end goal of delivering 1.8 million vehicles by the close of the year. That means delivering nearly half a million EVs by the end of this year.

Now the question remains – can they pull this off?

Only time will tell but let's look at some of the positives.

Tesla still remains dominant in the EV race

Regardless of the not-so-convincing results, Tesla maintains a firm grip in the fast-growing EV market.

As per the latest Kelley Blue Book's Q3 EV sales report, the EV giant maintains 50% market share in the US Q3 and a 56.5% share year-to-date.

Overall, the demand for electric automobiles continues to make headlines across the globe, especially during this period. It's estimated that around 313,086 electric cars were sold during this time. This number is almost 50% higher than the number of electric cars sold in the same period last year. It's also more than the 298,039 electric cars sold in the second quarter (Q2) of this year.

Should you buy Tesla shares?

Given the hiccups, you may be wondering whether Tesla's falling price is a buying opportunity. It goes without saying plenty of investors will remain optimistic about Tesla's dominance in the market.

Tesla's strong position and exciting product pipeline could suggest long-term growth potential. If you're a believer in the future of electric vehicles and clean energy, Tesla remains a top pick.

If you're interested in buying Tesla shares, consider investing using an online share trading platform. While doing so, do select a platform that offers US-listed stocks.

Looking for a low-cost online broker to invest in the stock market? Compare share trading platforms to start investing in stocks and ETFs.

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involve substantial risk of loss and therefore are not appropriate for all investors. Past performance is not an indication of future results. Consider your own circumstances and obtain your own advice before making any trades.

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