Why did the Tesla stock price tumble 10% despite beating expectations?

Tesla's shares were hammered overnight. What happened?

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The Tesla Inc (NASDAQ: TSLA) stock price had a night to forget on Thursday. 

The electric vehicle giant's shares lost almost 10% of their value to end the session at US$262.90.

Unfortunately, the selling continued in after-hours trade, with its shares slipping a further 1% to US$260.60.

This is despite Tesla beating expectations with its quarterly update this week.

Why did the Tesla stock price get hammered?

Initially, the market appeared to be very receptive to Tesla's second-quarter update, which revealed record quarterly revenue.

However, as analysts dug deeper into the results and quizzed management, sentiment started to sour.

According to CNBC, analysts are particularly concerned about Tesla's margins following a period of discounting. Its profit margin fell to 9.6% for the quarter, which was the lowest level in five quarters.

Goldman Sachs doesn't appear to believe that Tesla's margins will improve quickly. It said:

We believe there could continue to be margin headwinds in the intermediate term if Tesla lowers prices to support higher volumes.

Though, Tesla's CEO, Elon Musk, appears unfazed by this and suggests investors look at the bigger picture. He said:

The short-term variances in gross margin and profitability really are minor relative to the long-term picture. Autonomy will make all of these numbers look silly.

What else?

In addition, there are concerns about Tesla's dwindling backlog of deliveries. A widely followed tracker of Telsa orders, Troy Teslike, posted a worrying chart on Twitter showing just how low estimated backlog orders have now dropped.

Investors may be interpreting this as a sign that even with deep price cuts, Tesla could be about to hit some major sales headwinds.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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