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Tesla shares slide despite earnings beat

Thursday, July 20, 2023

Today’s headlines

What’s happening: Shares of Tesla declined in after-hours trading on Wednesday, following the company’s second-quarter results.

What happened: The automaker reported better-than-expected earnings and sales results for the second quarter.

However, Tesla’s profit margins shrank during the recent quarter due to a series of price reductions made this year.

How were the results: The Elon Musk-led company reported steep growth in sales for the three months ending June.

  • Revenues jumped 47.2% year-over-year to $24.93 billion, beating the consensus estimates of $24.48 billion.
  • Earnings surged 19.7% year-over-year to 91 cents per share, topping Wall Street expectations of 82 cents per share.

Why it matters: Tesla recently said it had delivered a record 466,140 new cars in the second quarter, representing an 83.5% year-over-year growth and higher than the 422,875 cars in the previous quarter.

The company also sold just under 250,000 cars in China, one of its key markets.

Tesla’s operating margins contracted to 9.6% in the latest quarter. However, the company said margins were still “healthy” and the decline was due to price cuts in the first and second quarter. Tesla’s gross margins narrowed to 18.2%, from 25% in the year-ago quarter and from 19.3% in the first quarter.

Management expressed their continued commitment to achieving the production goal of 1.8 million vehicles in 2023.

Tesla ended the second quarter with digital assets worth $184 million on its balance sheet, in-line with the first-quarter figure.

How shares responded: Tesla’s shares fell 4.2% to $279.07 during the extended trading session, after losing around 0.7% in regular trading on Wednesday. The stock has gained around 118% over the past six months.

What to watch: Investors will watch the debut of Tesla’s highly anticipated Cybertruck, which is expected to go into production later this year at the company’s Gigafactory in Texas.

The markets today

Gold will be in focus today after closing flat on Wednesday

Context: Gold futures remained broadly steady during Wednesday’s trading session, with prices holding at their strongest levels since early June.

Details: The safe-haven metal has remained in the green so far this week and is on course to ending the month with gains.

Strength in the dollar strengthened exerted some pressure on gold on Wednesday. A higher greenback generally makes dollar-denominated commodities and metals more expensive for foreign currency holders, lowering their global demand.

The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained more than 0.3% to reach 100.28 on Wednesday.

US Treasury yields moved lower, with the 10-year Treasury yield falling to around 3.742%, which lent some support to gold prices on Wednesday.

Gold futures for August delivery closed flat at $1,980.80 an ounce, broadly flat from Tuesday’s closing, which marked the strongest settlement for the yellow metal since June 6.

Silver futures for September delivery added 0.5% to $25.39 per ounce on Wednesday. October platinum fell 1% to $984.80 per ounce, while palladium for September declined by 0.7% to $1,307.40 per ounce and Copper futures for September fell by 0.4% to $3.81 per pound.

What are expectations: Traders will watch next week’s Federal Reserve meeting. Markets expect the US central bank to hike rates this time and await comments on whether policymakers have plans on raising them again.

Markets will also continue monitoring major economic data from around the world, which could provide direction to gold today.

Other Markets: European indices closed mostly higher on Wednesday, with the FTSE 100, CAC 40 and STOXX Europe 600 Index up by 1.80%, 0.11% and 0.26%, respectively, and the DAX 40 down by 0.10%.

The news shaping the markets

US Agency for International Development chief Samantha Power announced new aid worth $230 million for Ukraine’s small and medium-sized businesses impacted by the ongoing war with Russia. The news sent the safe-haven US dollar index lower this morning.


Australia’s unemployment rate came in unchanged at 3.5% in June. The figure being below market estimates of 3.6% lent support to the AUD/USD forex pair.


The People’s Bank of China kept lending rates unchanged at the July fixing, which sent the CNY/USD pair higher in forex trading this morning.


Japan recorded a trade surplus of ¥43.05 billion in June, compared to a year-ago deficit of ¥1,374.99 billion, which lent support to the JPY/USD forex pair.


Argentina reported a trade deficit of $1727 million in June. This being wider than the $231 million gap recorded in the year-ago month sent the ARS/USD pair slightly lower in forex trading this morning.

What else to watch today

Germany’s producer price inflation, France’s business confidence and business climate indicator, Turkey’s consumer confidence, foreign exchange reserves, government debt and Central Bank of Turkey interest rate decision, Eurozone’s current account and consumer confidence indicator, Spain’s balance of trade, Italy’s current account, South Africa’s value of recorded building plans passed and South African Reserve Bank interest rate decision, Mexico’s retail sales, US Philadelphia Fed manufacturing index, initial jobless claims, continuing jobless claims, existing home sales and natural gas stocks change, as well as Argentina’s leading economic index.


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