Tuesday, December 5, 2023

Bad day for Musk: his Starship rocket explodes and Tesla collapses in the stock market

It can be considered a Black Thursday for American tycoon Elon Musk. Two of its best-known companies, electric vehicle maker Tesla and aerospace firm SpaceX, were having a bad day. The first saw his stock fall sharply in the Wall Street session after its profit margins collapsed in the first quarter of the year due to Musk’s discount policy. While that was happening on the stock exchange, the aerospace firm (which isn’t listed) saw its big bet explode within minutes of its launch.

According to the results known this Wednesday, Tesla earned 2,513 million dollars (2,289 million euros at current exchange rates) between January and March. On the other hand, in the same period, his revenues also increased by 24%, reaching a turnover of 23,329 million dollars. Thus, adjusted gross operating income (EBITDA) decreased by 15%, from $5,023 million in the first quarter of 2022 to $4,627 million in the same period of this year. This weighed on the automaker’s stock market, which fell 9.75% in the US market at the close of the session.

In the last quarter of last year, the company initiated a series of price cuts in its major markets. First was China, the world’s largest EV market, where discounts went as high as 24%, in response to falling sales due to the Chinese government’s removal of purchasing aid. Subsequently, in the United States, the company announced a 20% discount for the Model Y, a discount also extended to the European market. But the company didn’t stop there and slashed prices again last week in Europe, leaving the Model 3 under €40,000. In the case of Spain, if you add the help of the government’s Moves III Plan, this vehicle can be purchased for 32,990 euros.

“In the current macroeconomic environment, we see this year as a unique opportunity for Tesla. With many automakers facing challenges with the finances of their electric car programs, the goal is to leverage our position as a cost leader. We are focused on rapidly growing manufacturing, autonomy investments, and vehicle software and staying on track with our growth investments,” Tesla explained in the presentation of the results. The price reduction policy allowed the company to deliver 422,875 cars in the first three months of the year, 36.4% more than in the same period of 2022.

Added to this is the failed launch of Starship, the rocket of his aerospace company SpaceX, which exploded four minutes after its launch in the first integrated flight attempt of the system around the Earth. Lift-off took place on Thursday at 15:34 Spanish time, six minutes later than originally planned due to a pressurization problem with the rocket. Then, after reaching an altitude of more than 30 kilometers, the rocket began to wobble and lost its orientation permanently, eventually exploding in mid-air.

“With a test like this, success comes from what we learn, and today’s test will help us improve Starship’s reliability as SpaceX seeks to make life multi-planetary,” the company said on its Twitter account. “Congratulations to the SpaceX team on an exciting test launch of Starship! We have learned a lot for the next test launches in a few months,” Elon Musk replied from his personal account on the bird’s social network. In early January this year, the company launched a financing round in which it raised $750 million and was valued at $137 billion.

World Nation News Desk
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