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What’s happening: Shares of Tesla fell sharply on Wednesday, after the company released results for its second quarter.
What happened: The EV maker reported better-than-expected sales for the second quarter but missed earnings estimates.
Tesla also said growth in vehicle volume in 2024 could be lower than last year.
How were the results: The Austin, Texas-based company reported sales growth for the second quarter.
Why it matters: Tesla has been facing stiff competition from other EV makers. Its profits were also hit by restructuring charges and higher operating expenses.
The company’s net income plunged to $1.48 billion in the second quarter, from $2.70 billion in the year-ago quarter.
Automotive revenues declined 7% year-over-year, with gross margins, excluding regulatory credits, coming in at 14.6%, lower than expectations of 16.29%.
Tesla produced 410,831 vehicles in the quarter, representing a 14% year-over-year decline. It delivered 443,956 vehicles last quarter, down 5% year-over-year.
Tesla closed the quarter with 6,473 Supercharger stations. Sales of regulatory credits almost tripled from a year ago to a record $890 million during the quarter.
Management projected a sequential rise in its production for the third quarter. However, the company warned of vehicle volume growth in 2024 being “notably lower” than last year, “as our teams work on the launch of the next generation vehicle and other products.”
Analysts at Goldman Sachs and Citigroup lowered the price targets for the EV maker from $248 to $230 and from $274 to $258, respectively.
How shares responded: Tesla’s shares tanked 12.3% to close at $215.99 on Wednesday, following the release of quarterly results. The stock has climbed around 18% over the past month.
What to watch: Investors will watch releases of the company’s upcoming models, especially the Robotaxi, the launch of which has been delayed from August 8 to October 10.
Context: The GBP/EUR moved higher on Wednesday as investors assessed the latest economic data.
Details: A PMI survey released on Wednesday showed business activity in the UK coming in better than in the Eurozone economies.
UK’s business activity accelerated in July, driven by the fastest growth in the manufacturing sector in two years. On the other hand, business activity growth in the Eurozone stalled this month.
UK’s composite PMI surged to 52.7 in July, topping market estimates of 52.6, while Eurozone’s composite PMI fell to 50.1 in July, the weakest in five months, from a reading of 50.9 in June.
The Bank of England is scheduled to hold its policy meeting in August, with markets expecting a rate cut.
Some weakness in the US dollar lent support to the GBP/USD forex pair. The US dollar index, which measures the greenback’s performance versus a basket of major peers, declined around 0.1% to 104.39 on Wednesday.
The GBP/USD forex pair traded almost flat at 1.2907 on Wednesday, while the EUR/GBP fell around 0.1% to 0.84. Meanwhile, London’s FTSE 100 declined by 0.17% to close at 8,153.69.
What to watch: Investors await economic data on business confidence and CBI industrial trends orders from the UK today. Sentiment in the UK manufacturing sector, which improved to 9 in the quarter to April, is expected to rise further to a reading of 15 in the third quarter.
Analysts expect the Confederation of British Industry survey’s total order book balance to decline to -19 in July, from June’s reading of -18.
Other Markets: US trading indices closed lower on Wednesday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 1.25%, 2.31% and 3.65%, respectively.
US Secretary of Defense Lloyd Austin reiterated the country’s unwavering support for Ukraine, when speaking with Minister of Defence Rustem Umerov. The news sent the RUB/USD pair lower in forex trading this morning.
South Korea’s economy contracted by 0.2% during the second quarter, compared to 1.3% growth in the prior quarter. The region’s economy shrinking for the first time since the fourth quarter of 2022 exerted pressure on the KRW/USD forex pair.
Argentina’s retail sales surged 186.8% year-over-year in May, accelerating from a 161% gain in the prior month, which sent the ARS/USD pair higher in forex trading this morning.
The Bank of Canada slashed its key interest rate by 25bps to 4.5% at its latest meeting, exerting pressure on the CAD/USD forex pair.
US S&P Global manufacturing PMI unexpectedly fell to 49.5 in July, missing market expectations of 51.7. This being the lowest reading this year sent the Nasdaq 100 lower by more than 700 points on Wednesday.
France’s manufacturing climate indicator, business climate indicator, initial jobless claims and unemployed persons, Turkey’s Business confidence, capacity utilisation and foreign exchange reserves, Eurozone’s Loans to non-financial corporations, household credit growth and money supply M3, Germany’s Ifo business climate index, Ifo current conditions and Ifo business expectations index, South Africa’s producer price inflation, Brazil’s FGV-IBRE consumer confidence index, current account, foreign direct investment, mid-month inflation rate and government revenues, Canada’s average weekly earnings, US durable goods orders, GDP growth rate, initial jobless claims, continuing jobless claims, Core PCE prices, natural gas stocks change, Kansas Fed composite index, Kansas City Fed’s manufacturing production index and Central Bank balance sheet, Argentina’s consumer confidence indicator, Indonesia’s foreign direct investment, as well as China’s foreign direct investment.
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