1 Terrible Surprise From Tesla's Earnings Call Wednesday
Key Points
Results were mixed for Tesla this quarter.
The company had minimal updates on one critical division.
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Tesla's (NASDAQ: TSLA) stock price dropped in after-market trading on Wednesday following its earnings announcement after the market closed. The results for the third quarter were mixed. Revenues beat expectations, but profits were below analyst projections.
There was one fatal flaw in the report that likely led to shares falling in value after the announcement.
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No news is bad news for Tesla's robotaxi division
Robotaxis will be the biggest growth driver for Tesla in the coming years. At least that's what many analysts covering the stock are forecasting. Major Tesla shareholder Cathie Wood, for example, thinks that robotaxis will ultimately account for 90% of Tesla's enterprise value. Wedbush analyst Dan Ives, meanwhile, thinks robotaxis could add $1 trillion to Tesla's valuation by the end of 2026.
Image source: The Motley Fool.
Here's the problem: Tesla delivered little to no meaningful updates to its robotaxi efforts during this quarter's conference call with investors. In fact, CEO Elon Musk urged caution when thinking about how fast the service might expand.
"We are being very cautious about the deployment," Musk told investors. He did add that his goal was to launch pilot services in eight to 10 new metro areas by the end of the year, but failed to deliver any specifics beyond that.
Seth Goldstein, a senior analyst at Morningstar, is bullish on Tesla's robotaxi ambitions. But he's growing cautious following the latest earnings announcement. "We still think testing is in the early stages, and we think the recent market rally is pricing in a lot of the optimism, a lot of the upside assuming that Tesla gains market share next year," he cautions investors. Minimal updates on the program this quarter, however -- with the exception of vague expansion goals teased by Musk -- have put a small dent in those heightened expectations, at least for now.
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Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
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