• Tesla's stock dropped significantly by over 8% in pre-market trading due to disappointing second-quarter earnings.
• Despite maintaining its position as the leading electric vehicle seller in the U.S., Tesla is gradually losing market share to competitors.
• Tesla's stock experienced a 12% drop on Wednesday.

Tesla Inc's (NASDAQ:TSLA) stock took a big hit, dropping over 8% in pre-market trading after the release of its second-quarter earnings, which disappointed analysts. The expected earnings per share were $0.62, but the actual figure was only $0.52.

This led to a swift reaction from investors and a drop in Tesla's share value. A major concern in the earnings report was a 7% decline in automotive revenue, totaling $19.9 billion compared to last year.

Additionally, Tesla's adjusted profit margin decreased, raising worries about the company's profitability in a competitive market.

To combat falling sales and increased competition, especially from the Chinese market, Tesla has had to cut prices and offer discounts, highlighting the challenges the electric vehicle maker faces.

Although Tesla remains the top electric vehicle seller in the U.S., it is slowly losing market share to competitors. This decline is partly due to its aging product lineup, which hasn't seen significant updates or new models recently.

The situation is further complicated by CEO Elon Musk's controversial political comments, which have divided consumer opinions and shaken investor confidence.

During the recent earnings call, Elon Musk quickly shifted the discussion to future growth opportunities, including plans for a new mass-market vehicle expected to launch in the latter half of next year.

He also revisited the idea of robotaxis, which aims to turn Tesla vehicles into a network of autonomous ride-hailing services. This vision could make Tesla cars income-generating assets for owners, supporting a new model of urban transportation.

However, investors remain concerned about Musk's history of ambitious promises often falling behind schedule.

Wednesday ended on a tough note for Tesla, with the stock dropping 12%, which is sharper than its opening price. This decline has brought attention to the $200 level, a key psychological point that aligns with the daily 200 simple moving average.

If the stock keeps falling, this level could act as an important support point and might lead to a rebound if it holds. Tesla's stock has been quite volatile this year, peaking with a 36% increase in July but now showing just a 10% gain for the month.

Overall, the company has seen a 12% decline this year, highlighting the challenges it faces. As Tesla prepares to launch new models and technologies, how the market reacts will be crucial for its financial future.

After the closing bell on Wednesday, July 24, the stock closed at $215.99, trading down by 12.33%.

This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.