Why Is Tesla Stock Dropping Today?
Key Points
Tesla grew year-over-year revenue for the first time in three quarters.
Some of Tesla's EV sales were likely pulled forward due to incentive expirations.
Tesla remains a story stock based on the future of robots and autonomous vehicles.
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Tesla (NASDAQ: TSLA) reported financial results for its third quarter after market close Wednesday. The company finally got back to revenue growth. Overall sales increased by 12% compared to the prior-year period. That was the first time revenue grew in the last three quarters.
Yet investors are punishing Tesla shares after the report. The stock sank nearly 6% before paring those losses. As of 10:25 a.m. ET, Tesla stock was down by 3.1%.
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Image source: Tesla.
Elon Musk is all about AI and robotics
Revenue growth notwithstanding, Tesla reported operating income of about $1.6 billion, down 40% year over year. That also missed Wall Street estimates of about $1.8 billion. That helps explain why the stock is selling off.
But CEO Elon Musk continues to push a narrative beyond electric vehicle (EV) sales. On the company's conference call, Musk focused on much more than just the EV market. Energy storage, robotics, and the path to fully autonomous vehicles dominated much of the conversation.
Tesla's energy generation and storage revenue soared 44% year over year. Musk noted that battery storage could go a long way to solve the country's growing power demand needs. "If you buffer the energy with batteries, you can effectively double the energy output in the United States just with batteries, pulling no incremental power plants," he said.
Musk also discussed his desire to remain influential in decision-making, referencing his pay package that will soon be voted on by shareholders. He mentioned a plan to build "this enormous robot army" and spent time discussing Tesla's next-generation AI5 artificial intelligence (AI) chip.
Tesla's AI technology will drive Musk's vision for a fleet of fully autonomous self-driving vehicles. That's where Tesla bulls focus their attention, too. Tesla remains a story stock, and investors who don't want that uncertainty were selling shares today based on current business results.
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Howard Smith has positions in Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
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