Shares of Tesla drops after announcing a profitable first-quarter


After announcing its first-quarter profits, Tesla shares plummeted by more than 4% on Tuesday. This fall is a result of failure to mitigate investor concerns about its soaring evaluation, the chip shortage and rising competition. Its quarterly revenue hardly past the estimates as the electric carmaker mostly depended on the sales of environmental credits which were sold to other automakers. A part of it also relied on the liquidation of 10% of its $1.5 billion bitcoin investment.

(Also read: Elon Musk says Tesla sold Bitcoin to prove liquidity as cash alternative)

Elon Musk however did earn option payouts worth $11 billion based on the goals reached by the company. The shares closed at 4.5% at $704.74, down by more than 20% from its intraday high that the electric carmaker reached in January.

Despite the chip shortage that has grievously punched the auto sector, Tesla successfully posted deliveries in the first quarter, however, analysts said that if the shortage continues, the company’s growth would be impacted.

Eric Schiffer, CEO of private equity Patriarch Organization, which has an underweight stance on Tesla, was quoted by news agency Bloomberg saying, “Tesla’s performance was OK but it wasn’t a Elon Musk slam dunk…I don’t think people are into Tesla because of bitcoin.” According to reports he also added that the company’s performance had fallen short of in catching up with its astronomical valuation and investor was rejecting the stock short term.

Zachary Kirkhorn, Tesla chief financial officer pointing at the unpredictability of the situation said, “We believe that this landscape is improving, but it does remain difficult, and it’s an evolving situation.”

Roth Capital Partners, a small privately held investment banking company, was quoted by Bloomberg saying that it has a neutral stand on Tesla’s rating. The firm added that the company seems to assume that all the EVs slated to be launched by 2025 would be flops. “Tesla does not operate in a vacuum,” said the firm’s report.

(With input from wires)