Why Tesla Stock Is Plummeting Today

Key Points

• Tesla's Q2 sales and earnings came in below Wall Street's expectations.

• The company's automobile revenue fell 16% year over year to $16.7 billion.

• CEO Elon Musk said that the company could have a few rough quarters due to tariffs and other pressures.

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Tesla (NASDAQ: TSLA) stock is sinking Thursday following the company's latest quarterly report. The electric vehicle (EV) leader's share price was down 8.5% as of 10:30 a.m. ET amid a 0.1% gain for the S&P 500 and flat trading for the Nasdaq Composite. The stock had been off as much as 9.5% earlier in trading.

Tesla published its second-quarter results after the market closed yesterday, and the results came in below already lowered expectations. Adding more bearish pressures, the company issued some potentially concerning guidance, and a new report also showed that the automaker was continuing to lose market share in Europe.

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Tesla stock sinks on Q2 numbers and outlook

Tesla reported non-GAAP (adjusted) earnings per share of $0.40 on sales of $22.5 billion. Meanwhile, the average analyst estimate as polled by LSEG had called for per-share earnings of $0.43 on revenue of $22.74 billion.

Automotive revenue fell 16% year over year to $16.7 billion, and revenue from regulatory credits in the category fell roughly 51% to land at $439 million. Investors were already anticipating soft performance in the quarter, but the numbers came in worse than anticipated.

The European Automobile Manufacturers Association also published new coverage on the auto industry this morning and said that Tesla had continued to lose market share in Europe in June. The organization said that the EV company's total market share in the European Union, Britain, and the European Free Trade Association declined to 2.8% in June -- down from a 3.4% share in the month last year.

What's next for Tesla?

Speaking during the company's conference call, CEO Elon Musk said that Tesla would probably have a few rough quarters as tariff-related costs and the federal subsidies and tax credits for EVs lapse. The company is also facing increasingly tough competition in its core EV market, and new vehicles from Chinese companies and other automakers are eating into its sales. With its auto business under pressure, the near-term bullish case for Tesla has become increasingly dependent on positive developments for its robotaxi and robotics initiatives and other growth bets outside its core market.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.