Tesla Shares Take a Dip With Focus Turning to Lagging Growth
Tesla Shares Take a Dip With Focus Turning to Lagging Growth
(Bloomberg) -- After doubling the value of Tesla Inc. shares over the past three months, investors took a breather on Thursday following the electric-vehicle maker’s fourth consecutive quarterly profit, which was widely anticipated by the market.
Tesla’s market valuation of $280 billion now dwarfs even the largest traditional carmakers, and its stock has soared 262% this year, even after a steep decline in February and March on coronavirus-related concerns. The shares dropped as much as 7% to $1,480.77 on Thursday after initially rising on the news of second-quarter profit and the enhanced possibility it will enter the S&P 500 Index.
Read more: Tesla Market Value Jumps Past U.S., European Auto Indexes
With the latest results out of the way, the focus will turn to Tesla’s growth rate, especially as its valuation now compares with some of the most valuable technology companies.
While Tesla’s vehicle delivery numbers and quarterly profit were impressive, “automotive revenue declined 4% year-over-year and has been in a downward trajectory since peaking in fourth quarter of 2019,” Needham analyst Rajvindra Gill wrote to clients. Gill noted that free cash flow was also down from the year-ago quarter, which Tesla said was due to a higher percentage of deliveries occurring at the end of the quarter.
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