Tesla Q3 earnings reflect softening demand

Tesla Inc reported lower than expected third quarter revenue, as the electric carmaker led by Elon Musk delivered fewer vehicles than expected.

Tesla shares slumped as much as 7 percent after the results.

Musk is expected to speak with analysts on a conference all and address questions about whether Tesla, the world's most valuable automaker, will stick to its target of boosting deliveries by 50 percent this year. Some have questioned whether demand is softening.

Tesla achieved record quarterly deliveries largely thanks to its rampup in China. But the most prominent proponent of EVs has seen its shares tumble about 50 percent from record highs last November as investors were spooked by a cooling global economy and Musk's bid to buy social media company Twitter.

Early this month, Tesla said it delivered 35 percent more vehicles in the July-September period from the previous quarter, but the number fell shy of vehicle production and analysts' estimates.

Tesla blamed challenges transporting vehicles, but some analysts were also concerned that demand may have softened.

Some analyst said Tesla will have a hard time maintaining premium pricing and margins, especially as the global economy is cooling, and it is ramping up production of new factories.

The company's third-quarter automotive gross margin was 27.9 percent, down from 30.5 percent last year.

This month, Musk raised hopes of a share buyback earlier when he said "Noted" on Twitter in response to a major individual investor's call for a stock buyback.

Such a move could benefit Musk and help him raise cash to fund his $44 billion deal to take Twitter private. Some experts say Musk may need to sell about $3 billion more in stock after the earnings announcement to help fund the deal.

Tesla's revenue for the third quarter was $21.45 billion, compared with analysts' estimates of $21.96 billion, according to IBES data from Refinitiv.