Concerns of investors remained about the lofty evaluation of the United States based electric car maker Tesla as well as the over the prolonged global chip shortage and rising competition in the electric car segment which resulted in the stocks of the company falling by about 4 per cent after the company reported its first-quarter earnings results.
The company just managed to beat estimates for its quarterly revenue as the company depended mostly on sales of environmental credits sold to other automakers as well as the liquidation of 10 per cent of its $1.5 billion bitcoin investment for generating revenues for the quarter,
“Tesla’s performance was OK but it wasn’t a Elon Musk slam dunk…I don’t think people are into Tesla because of bitcoin,” said Eric Schiffer, CEO of private equity Patriarch Organization, which has an underweight stance on Tesla.
“Investors are rejecting the stock short term,” he said, saying Tesla’s performance has fallen short of catching up its “astronomical valuation.”
The company’s CEO Elon Musk however continued to earn payouts worth $11 billion calculated on the basis of targets achieved by the company.
At the close of trading on Wednesday, the stocks of the company were down by 4.5 per cent and were almost 20 per cent lower than the intraday high that it had reached in January. Over the past one year, the stocks of the company had surged by more than 700 per cent which made the company the most valuable auto company of the world.
Despite a global chip shortage that has hit a host of other auto companies, record deliveries of its cars was reported by Tesla for the first quarter. However the growth prospect of the company could be threatened by a prolonged shortage of chips and batteries, said analysts.
“A global shortage of computer chips is expected to limit production from all manufacturers in the immediate future, and Tesla won’t be exempt,” said Nicholas Hyett, equity analyst at Hargreaves Lansdown.
“Given the ongoing importance of its production ramp up, it may even be more heavily impacted.”
“We believe that this landscape is improving, but it does remain difficult, and it’s an evolving situation,” said Tesla Chief Financial Officer Zachary Kirkhorn with respect to supply chain instability.
Roth Capital Partners said it holds a neutral rating on Tesla, saying that Tesla’s large premium “seems to rest on the specious assumption that the hundreds of EVs slated for launch by ’25 will all be flops.”
“Tesla does not operate in a vacuum,” it said in a report.
(Adapted from MarketScreener.com)