Tesla shares tumbled 12% on Wednesday, evaporating almost $100 billion in stock market value after CEO Elon Musk's talk of humanoid robots and driverless taxis failed to comfort investors worried about the electric car maker's shrinking profit margins.
Tesla posted its lowest quarterly profit margin in five years late on Tuesday, with earnings per share missing estimates for the fourth consecutive quarter.
It was the biggest one-day percentage drop in Tesla's stock since 2020, and it left Tesla's market capitalisation at just under $700 billion, down from over $1 trillion in 2021.
Still the world's most valuable car maker, Tesla's valuation relies on investor expectations of big future profits driven by yet-to-launch products such as its promised robotaxis and robots.
"All of Musk's enthusiasm on the call, outside of (energy) storage, were for products that don't exist," said TD Cowen's Jeff Osborne.
Tesla's weak results, along with a report from Alphabet in which it flagged higher capital expenses, amounted to a poor start to second-quarter reports for Wall Street's most valuable companies.
Google parent Alphabet's stock fell almost 5%, and the losses in its shares and Tesla's sent Wall Street into a deep sell-off as investors worried about pricey valuations.
Tesla's EV deliveries have fallen for two straight quarters, and it has not introduced a lower-cost model that many expected, causing buyers to turn to rival EV makers. China's BYD, for instance, widened its sales lead over Tesla in Singapore in the first half of 2024.
Tesla has been forced to cut prices and boost incentives to drum up sales of its aging vehicle line-up. Musk said rivals "have discounted their EVs very substantially, which has made it a bit more difficult for Tesla".
The company said the cheaper models it expects to bring out in the first half of 2025 would result in less cost reduction than previously expected, while delaying a widely awaited event for its robotaxi to October.
"Tesla is not being priced on auto, but autonomy and AI ... We believe any payoff from (Tesla's AI) initiatives (is) further out," wrote UBS analyst Joseph Spak, reiterating a "sell" rating on the stock.
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