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Why Tesla Stock Was Slammed Thursday

By Daniel Sparks - Jul 25, 2019 at 1:45PM

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Worse-than-expected financial results and the loss of a key executive spooked investors.

What happened

Shares of electric-car company Tesla ( TSLA -0.95% ) took a hit on Thursday, falling as much as 14.8%. As of 1:08 p.m. EDT, the stock was down 14%.

The stock's slide follows the company's worse-than-expected second-quarter results and news that the chief technology officer, JB Straubel, is stepping down.

Vehicle production in Tesla's factory

Teslas being assembled. Image source: author.

So what

For its second quarter, Tesla posted a non-GAAP (adjusted) loss per share of $1.12. On average, analysts were expecting a loss of $0.40. Notably, this loss was significantly narrower than an adjusted loss of $3.06 in the year-ago quarter.

Tesla's total revenue rose 59% year over year to $6.35 billion, driven primarily by a 134% year-over-year increase in vehicle deliveries. This was below analysts' consensus forecast for revenue of $6.41 billion.

The automaker also announced during its second-quarter earnings call that Straubel, who has been at the company 15 years and has played crucial roles in its battery technology, is stepping down. He will, however, serve in an advisory role.

Straubel asserted that the move is not because of a "lack of confidence in the company or the team or anything like that."

Now what

It's important to note that Tesla maintained its guidance for vehicle deliveries in 2019 to rise 45% to 65% year over year. In addition, management said it still expects to be profitable on a GAAP basis in Q3 and beyond.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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