Tesla Shares Decline While Asian Suppliers and Markets Rally

Tesla’s shares experienced a slight decline during extended trading on Wednesday, following the release of its first-quarter financial results that fell short of analysts’ expectations. The electric vehicle maker beat expectations by 23 cents with adjusted earnings of 27 cents a share while raking in $19.34 billion in revenue. Analysts surveyed by LSEG had predicted 39 cents per share in earnings and $21.11 billion in revenue. Even with that significant drag from Tesla, the Asian suppliers still made out well thanks to general market increases across the region.

Tesla’s weaker than expected earnings report has forced the company to issue a lower guidance of its non-GAAP gross profit margin in 2025. Analysts forecast it to be 65% to 66.5% of revenue, a decrease from 69.1% in 2024. This news led investors to wonder about the new company’s profitability path going forward.

Curiously enough, despite Tesla’s woes, most of its new Asian suppliers saw significant increases on the same day. LG Display, one of the biggest suppliers of car displays for Tesla’s Model 3, jumped 3.68%. No real market disruption occurred, as other Chinese suppliers like BYD, Xiaomi Corp, and Xpeng experienced big share price gains as well. Shares of BYD were last up 4.47% on the Hong Kong market, while Xiaomi was up a whopping 6.53%. Xpeng was up 6.34%, and Nio was up 5.33%.

Alibaba Group Holdings skyrocketed 5.82%, providing a major lift to the broader market. In other earnings, SK Hynix posted a 4.37% growth and Samsung Electronics a small 1.45% gain to its net profits. Taken together, those developments helped fuel a historic rally across all major Asian stock markets. The benchmark Hang Seng Index shot up 2.37% and finished at 22,072.62. At the same time, the Nikkei 225 was up by 1.89%, closing at 34,868.63 on Thursday.

The mixed performance of Tesla highlights the challenges the company faces as it navigates a competitive landscape in the electric vehicle market. The earnings miss is notable too, particularly given the latter’s rising competition from other EV makers. Companies such as BYD and Xpeng are eating the lunch of traditional automakers.