Elon Musk ‘acted like a little baby’ during Tesla’s terrible earnings call and ‘blamed high interest rates’ as profits fell to $1.85 billion, sending shares tumbling 15%

• World’s richest man was ‘close to tears’ as he struggled to defend falling profits to angry investors at ‘mini-disaster’ earnings call 
• The tech titan played down prospects for the long-delayed ‘Cybertruck’ ahead of its planned roll-out next month
• Analysts warn that his honeymoon with the markets may be over with one promising ‘no more rose-colored glasses’  

Elon Musk was ‘close to tears’ as he struggled to defend Tesla’s crashing profits to angry investors, prompting analysts to ask ‘is the story over?’

The backlash has been growing since the world’s richest man blamed interest rates for a 44 percent drop in net profits at a ‘terrible’ earnings call with shareholders on Wednesday.

Shares of the stock have slumped 15 percent in their worst week of the year after tycoon admitted ‘we dug our own grave’ with their long-delayed fully electric ‘Cybertruck’.

But it was his lack of ideas that angered investors long accustomed to allowing the tech visionary the benefit of the doubt.

‘For a leader to cry about the economy rather than funneling that and coming up with a plan is pathetic,’ YouTuber Kevin Paffrath told Yahoo Finance.

The famously emotional billionaire ‘acted like a little baby’, as he struggled to explain a 44 percent drop in Tesla’s profits at a ‘terrible’ earnings call with shareholders

Musk introduced the all-electric battery-powered Tesla Cybertruck at Tesla Design Center in Hawthorne, California on November 21, 2019

The bungled earnings call helped knock 15 percent of Tesla’s share price in less than a week

‘We need to know the light is at the end of the tunnel rather than hearing a complaining CEO who’s not actually providing that path.’

The famously emotional billionaire ‘acted like a little baby’, according to Paffrath, blaming rising interest rates for delays to the planned $10 billion Mexican gigafactory which will churn out batteries for his fleet of electric vehicles.

And he insisted it was the spiraling prime rate, which has risen from 3.5 to 8.5 percent in the last 18 months, which had crippled demand for his cars.

‘If interest rates remain high or if they go even higher, it’s that much harder for people to buy the car,’ he told his audience.

‘They simply can’t afford it.’

The company’s share of the electric vehicle market has slumped from 60 to 50 per cent in the last six months despite slashing prices by a quarter, with the cost of a Model Y sport-utility vehicle, now starting at $44,000.

There was more good news for consumers as Musk’s new CFO Vaibhav Taneja insisted that ‘reducing the cost of our vehicles is our top priority’.

Profits at the company fell to $1.9 billion in the three months to September, down $1.4billion on a year earlier.

Tesla’s year-over-year revenue growth was the weakest since the pandemic hit in the second quarter of 2020, and third-quarter earnings fell 37% to 66 cents per share, the lowest in two years.

In all it reported $23.4 billion in sales for the second quarter, down from analyst forecasts of roughly $24.2 billion.

The company has slashed prices by a quarter, with the cost of a Model Y sport-utility vehicle, now starting at $44,000 

YouTube finance expert Kevin Paffrath slammed Musk for not charting a course out off Tesla’s financial troubles   

Wedbush Securities analyst Dan Ives told businessinsider.com the call was a ‘mini disaster’, with Musk remaining silent about his company’s progress in developing its long promised autonomous vehicles.

‘We heard from a much more cautious Musk who focused on higher interest rates, AI investments, and highlighting the difficult path for Cybertruck production over the next 12 to 18 months,’ he added.

Musk has penciled in November 30 as the launch date for the Cybertruck but its price and final specifications are still a mystery.

It is four years since he showed off the prototype during an embarrassing launch event at which its ‘shatterproof’ window broke.

He has described it as a vehicle that will ‘change the look of the roads’, with ‘better utility than a truck with more performance than a sports car’.

But he told investors on Wednesday that it will be up to 18 months before it becomes a ‘positive cash flow contributor’.

‘Demand is off the charts,’ he insisted.

‘We have over one million people who have reserved the car, so it’s not a demand issue, but we have to make it, and we need to make it a price that people can afford, insanely difficult things.’

‘The blood, sweat and tears that will be required to achieve that is just staggering.’

He promised to further ‘invest significantly in AI development,’ but there was no repeat of his boasts about its ‘potential to make Tesla the most valuable company in the world by far’ with ‘fully autonomous cars at scale and fully autonomous humanoid robots’.

Shares in the company remain 96 per cent up on the start of 2023 but the company’s long honeymoon with market makers may be coming to an end.

‘No more rose-colored glasses,’ Wells Fargo analyst Colin Langan wrote in a note to investors.

‘How can we defend a ‘growth’ stock that appears ready to enter its 2nd consecutive year of earnings decline?’ asked Morgan Stanley’s Adam Jonas.

‘Five percent auto revenue growth, collapsing margins and trading at 200x FCF,’ concluded Toni Sacconaghi of Bernstein.

‘Is the story broken?’

Cybertruck timeline: Heavy duty vehicle was first unveiled back in 2019

November 2017: Elon Musk describes a concept of a ‘pickup truck that can carry a pickup truck’. 

November 2019: Musk unveils the Cybertruck prototype. The windows get smashed in a botched demo. 

January 2021: The CEO tweets that Cybertruck ‘doesn’t need a garage’ – because it offers sufficient protection on its own. 

April 2021: Musk says he’s been ‘driving Cybertruck around the site where it will be built’. 

September 2021: Musk said Cybertruck isn’t expected to go into production until late 2022. 

Musk speaks in front of the newly unveiled all-electric battery-powered Tesla’s Cybertruck with shattered windows, after a failed resistance test, at Tesla Design Center in Hawthorne, California on November 21, 2019

January 2022: Musk reveals he’s been driving the latest ‘awesome’ prototype around Giga Texas. 

January 2022: Cybertruck production delayed until ‘hopefully next year’, Musk says in an earnings call. 

September 2022: Musk tweets: ‘Cybertruck will be waterproof enough to serve briefly as a boat, so it can cross rivers, lakes & even seas that aren’t too choppy.’

November 2022: Musk tweets: ‘Cybertruck is something special that comes along once in a long while.’  

February 2023: Musk reaffirms that Cybertruck production will start in 2023. 

May 2023: Musk says Tesla is ‘working hard to get Cybertruck into production, calling it a ‘tough product to design and even tougher to build’. 

July 2023: First Cybertruck built at Giga Texas. 

 

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