Tesla tanks 13% after earnings, dragging other EV stocks lower

• Tesla's stock dropped as much as 13% on Wednesday after reporting weak second-quarter earnings.

• The drop pulled down other EV stocks, including Rivian and Lucid.

• Not everyone is dismissing Tesla, as some bulls are still betting on long-term catalysts.

Tesla stock tumbled as much as 13% on Wednesday after the company's second-quarter results offered limited reassurance to eager investors.

The leading electric-vehicle maker reported adjusted earnings per share of $0.52 a share, missing the consensus estimate of $0.60. It marked the fourth straight quarter of Tesla falling short of analyst forecasts.

CEO Elon Musk also said the company's much-anticipated Robotaxi event would be postponed until October 10. The taxi's unveiling, seen by many on Wall Street as a major AI-driven catalyst for Tesla, was originally scheduled for next month.

"Tesla's muddling through the EV recession," Adam Jones, a Morgan Stanley analyst, wrote, citing a quarter-over-quarter drop in capital expenditures.

The sharp loss dragged other EV stocks lower on Wednesday. Tesla's fellow US manufacturers Lucid and Rivian fell as much as 6.6% and 8.3%, respectively. Other companies in the red included Polestar (-4.6%), Zeekr (-6.9%), VinFast (-5.9%), Workhorse (-3.4%), and Nikola (-5.2%).

The losses extended to Chinese names, with XPeng, Nio, and BYD falling at least 2%.

While the EV sector saw a vehicle-delivery resurgence earlier in the quarter, the environment is getting increasingly difficult as consumer demand shifts toward cheaper hybrid models.

This week offered more clues about the so-called EV recession after General Motors announced it would delay plans for an all-electric-vehicle manufacturing plant and its new Buick EV model. Its stock is down nearly 5% this week, despite beating second-quarter estimates.

According to the Barclays analyst Dan Levy, Tesla's report should persuade investors to focus on its fundamentals once again. The stock is up 20% from a month ago as the company's tech ambitions fall back into the spotlight.

This run-up is why the Cantor Fitzgerald analyst Andres Sheppard has downgraded the stock to neutral.

But not everyone on Wall Street has soured over the Tesla report. For instance, Gene Munster of Deepwater Asset Management cited long-term bullish catalysts, including Tesla's pledge to create fully self-driving cars and humanoid robots.

Wedbush Securities' Dan Ives echoed the optimism, saying the firm's upcoming Robotaxi day should trigger a new wave of growth. He continued to hold a $300 price target on Tesla.

Even Sheppard lifted Tesla's price target from $230 to $245, citing record growth in the company's energy-storage and -deployment segment. This battery sector deployed 9,400 megawatt-hours in the second quarter.

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