Tesla and Major Tech Stocks Experience Significant Declines

In a turbulent trading session, Tesla shares plummeted over 12%, marking the steepest decline since 2020. This drop followed the electric vehicle manufacturer’s release of quarterly earnings that fell short of expectations, alongside a notable decrease in automotive revenue. The decline has been attributed to aggressive price cuts and incentives in response to slowing sales and intensified competition, particularly in the Chinese market. Year-to-date, Tesla's stock has decreased by 13%, contrasting sharply with the Nasdaq's 16% gain. Other major tech companies also faced losses, with Nvidia, Meta Platforms, and Microsoft seeing declines of 6.8%, 5.6%, and 3.6%, respectively. The broader market was affected as the S&P 500 and Nasdaq fell in response to disappointing earnings reports from both Alphabet and Tesla. Analysts are expressing concerns about the future, particularly as Tesla's adjusted operating margin has shrunk to its lowest level in three years, raising questions about the company's profitability amid declining auto sales. Ford Motor Company also faced challenges, with shares dropping 11% in after-hours trading. Despite beating revenue estimates and raising its free cash flow target, the automaker missed Wall Street's second-quarter earnings expectations due to rising warranty costs, leading to investor disappointment. Ford maintained its 2024 earnings guidance, which further contributed to the negative sentiment. Market analysts are closely monitoring these developments, as the gap between current realities and future projections, particularly regarding Tesla's performance, continues to widen, putting additional pressure on stock prices.