Tesla's new financial report disappoints Wall Street: Q2 automotive revenue down 7%, with earnings per share and net profit plummeting by over 40% year-on-year.](https://wallstreetcn.com/articles/3720707)Barclays believes that despite Musk's emphasis on Tesla's future development in AI and autonomous driving, this financial report has shifted investors' focus back to the company's fundamentals. Currently, profit margins have once again become the market's focus, but considering the ongoing pressure on car prices, Tesla's profit margins may be difficult to significantly increase.<h2>Performance below expectations, highlighting pressure on automotive profits</h2>An analysis report released by Barclays analysts including Dan Levy on Tuesday pointed out that Tesla's performance in the second quarter fell below expectations, mainly due to pressure on automotive profit margins.The financial report shows that Tesla's automotive gross margin (excluding &#34;carbon credit&#34; points) in the second quarter was only 14.6%, a decrease from the previous quarter and the same period last year, well below the market's expected 16.6% and Barclays' expected 16.0%.<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/8c37718f-4774-4c8d-9356-fe171e8ba0af.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/8c37718f-4774-4c8d-9356-fe171e8ba0af.png"/>Goldman Sachs' latest report also echoed this view, with both institutions attributing this mainly to the decline in average selling prices.After the financial report was released, Tesla's US stocks accelerated their decline in after-hours trading, falling by more than 8% at one point.<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/0c814bd5-8184-4d6a-817d-2e9698438adc.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/0c814bd5-8184-4d6a-817d-2e9698438adc.png"/><h2>&#34;AI Narrative&#34; Fails? Barclays: Profit margins are the market's focus now</h2>Before the financial report was released, Wall Street analysts generally believed that the decline in the electric vehicle business had become a consensus, and investors would pay more attention to Tesla's &#34;AI narrative&#34;.Morgan Stanley previously pointed out that compared to electric vehicles, investors are more concerned about Tesla's &#34;AI narrative&#34;. A survey by Morgan Stanley showed that 68% of investors see AI as the main driver of Tesla's stock price in the next year, with only 33% leaning towards electric vehicles.After Tesla announced its delivery volume this month, many investment banks such as Citigroup and Mizuho raised their target prices for Tesla, stating that Tesla's future growth will mainly come from the execution of AI projects, especially Robotaxi and humanoid robot Optimus.Musk confirmed the launch of Robotaxi in October and the news of full self-driving technology (FSD) regulation during the conference call. Before the financial report was released, Musk also announced that Tesla will internally deploy humanoid robots first next year, with mass production expected in 2026, and an estimated price below $20,000However, from the performance of Tesla's stock price, it seems that Tesla's &#34;AI narrative&#34; has malfunctioned, forcing investors to re-examine the company's fundamentals.Despite a significant decline in the automotive business, Tesla's non-automotive business achieved record profits in the second quarter, mainly driven by the energy sector and &#34;carbon credit&#34; sales. Tesla also reiterated that new models are progressing as planned, with mass production expected to begin in the first half of 2025.Barclays analysts wrote that some investors may believe that Tesla's profit margin is about to bottom out, but considering the ongoing pressure on car prices, it may be difficult for the profit margin to increase significantly.<blockquote>Investors' focus will eventually return to Tesla's growth plans, but for now, the trend of profit margins has once again become the focus.</blockquote>Barclays has given Tesla a &#34;Neutral&#34; rating with a 12-month target price of $225, 8.5% lower than Tuesday's closing price. Goldman Sachs also maintains a Neutral rating on Tesla stock with a target price of $248, essentially in line with Tuesday's closing price.Goldman Sachs pointed out that investors may pay more attention to automotive profit margins, automotive demand, the timeline for mass production of affordable cars, followed by the development progress of autonomous driving and AI-related products

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Barclays pointed out that profit margin has once again become the focus of the market, but considering the continued pressure on car prices, Tesla's profit margin may be difficult to significantly increase. Barclays believes that Tesla's stock price may have more than an 8% downside potential in the next year

- Tesla's new financial report disappoints Wall Street: Q2 automotive revenue drops by 7%, with earnings per share and net profit plummeting over 40% year-on-year.
- Barclays highlights Tesla's underperformance in Q2, attributing it to pressure on automotive profit margins, which stood at 14.6%, below market and Barclays' expectations.
- Despite Musk's emphasis on AI and autonomous driving, concerns shift to Tesla's profit margins due to sustained pricing pressures, impacting stock performance post-earnings release.

Tesla's "AI Narrative" malfunctioning? Barclays: Profit pressure will pull investors back to fundamentals