Tesla stock plunges 13.5% after profit miss and slow rollout of key projects

Tesla's stock suffered a dramatic fall of about 13.5% on Thursday, representing one of the company's most significant single-day market losses in recent history. This sharp decline occurred the day after Tesla released its second-quarter earnings, which revealed earnings per share of 31 cents, falling short of the 51 cents anticipated by Wall Street analysts. Although revenue exceeded predictions, the disappointing profit figures triggered a significant sell-off.

During an investor call, CEO Elon Musk faced pointed questions regarding the progress of Tesla's highly anticipated Robotaxi service and Optimus humanoid robot. Both projects, which Musk has previously touted as potentially revolutionary revenue streams, have experienced slow development and missed self-imposed deadlines. Robotaxis currently operate on a limited basis in the U.S., and the Optimus robot is not yet available to consumers.

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Optimus robots would be Tesla’s biggest product ever.

Musk attempted to reassure investors about Optimus's future potential, calling it Tesla's biggest product ever, but acknowledged numerous development hurdles. He attributed the slow rollout of Robotaxis to an extreme focus on safety, expressing concern that accidents could lead to negative publicity and regulatory action. These ambitious ventures into robotics, autonomous driving, and AI demand substantial investment with little immediate financial return.

The company's significant spending, amounting to $5.8 billion in the second quarter, resulted in a negative free cash flow of $1.1 billion for the first time in over two years. While electric vehicle sales saw a boost, particularly from European buyers and rising fuel costs, Tesla's heavy investment in new products has shifted investor focus away from its core automotive business. This performance makes Tesla the weakest performer among the "Magnificent Seven" tech stocks, which collectively saw their market value decrease by $767 billion on Thursday.

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Robotaxi’s slow rollout was the result of an abundance of concern for safety and worry that deadly accidents would result in negative media attention and a regulatory crackdown.