Tesla stock fell after earnings fell and the electric car maker warned of slowing growth in 2024
Tesla shares fell at the opening bell on Thursday as the maker of electric cars, solar panels and batteries warned investors about slowing sales growth this year after posting fourth-quarter results that were weaker than most expected.
In a letter to shareholders issued on Wednesday, Tesla warned that sales growth this year could be “significantly lower” than the growth rate in 2023, as it works to launch an affordable next-generation car at a factory near Austin.
TeslaThe letter stated that the company is between two major waves of growth, one from the global expansion of the Model 3 and Y, and the second coming from the new car.
The company, headed by billionaire Elon Musk, reported fourth-quarter adjusted earnings of 71 cents per share on revenue of $25.17 billion. Analysts surveyed by FactSet expected earnings of 73 cents per share. Revenues were expected to reach $25.64 billion.
Profits stalled because Tesla cut prices worldwide during the year in an attempt to boost its sales and market share.
Shares fell more than 9% in Thursday morning trading.
Tesla’s conference call on Wednesday to discuss its financial results left many frustrated, Wedbush’s Dan Ives said in a client note.
“In line with Q4 expectations, investors wanted to wrap their arms around the declining margins and never-ending continuous price cuts we’ve seen globally, but instead, we heard from a more cautious Musk who focused on production and timelines for next-generation vehicles,” he wrote. Eve: “FSD/AI investments where too much of Tesla’s bigger story was talked about rather than concrete guidance.”
However, the analyst remains bullish on Tesla, believing that adoption of electric vehicles in a broader mass market is imminent. However, Ives acknowledges that there are still challenges to be met.
“This is a pivotal period for Musk for Tesla to move beyond this, which will help shape (or haunt) its electric vehicle future,” he said.
In the short term, it will be difficult for electric vehicle competitors to catch up to Tesla as the company focuses on electric efficiency and invests in battery technology, said TD Cowen’s Jeffrey Osborne. However, the analyst said there is a “significant amount” of production-related risks in the coming quarters that could pressure margins and the stock as Tesla ramps up its new factories in Germany and Texas and new vehicles.