Why Tesla Stock Dropped 9% This Week

Shares of Tesla (NASDAQ: TSLA) have fallen 9% this week as of 11:45 a.m. ET Friday, according to data provided by S&P Global Market Intelligence, largely driven by the market's response yesterday to the electric vehicle maker's second-quarter results. While Tesla's quarter was technically better than expected, investors appear to be recoiling after management commentary raised concerns over a combination of margin headwinds and modest delays in scaling up production of the company's upcoming Cybertruck.

To be clear, Tesla's headline numbers were strong; revenue climbed 47% year over year (YOY) to $24.9 billion, handily outpacing estimates of $24.7 billion. Adjusted earnings of $0.91 per share also rose 20% YOY, well ahead of the $0.82 per share analysts were modeling. Tesla's top-line growth was largely driven by record quarterly deliveries, leading to a 46% increase in automotive revenue. Meanwhile, energy generation storage revenue soared 74% to just over $1.5 billion, and services other revenue jumped 47% to $2.15 billion.

However, with revenue growth significantly outpacing earnings growth and operating margin at 9.6% -- down from 11.4% last quarter and 14.6% in the year-ago period -- it's obvious that recent price cuts are weighing on Tesla's profitability. And while the company confirmed that "Cybertruck factory tooling [is] on track," management also vaguely noted that Tesla is still producing only RC (release candidate) builds of the cutting-edge pickup at its Texas plant, leading some to speculate that it might not be able to meet its stated goal of beginning volume production early next year.

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Source Fool.com