1 of 3| File - Tesla vehicles charge at a station in Emeryville, Calif., Wednesday, Aug. 10, 2022. Tesla’s stock is faltering before the market open on Thursday as the electric vehicle, solar panel and battery maker cautioned on slower sales growth this year and posted weaker-than-expected quarterly earnings. (AP Photo/Godofredo A. Vásquez, File)
2 of 3| FILE - Tesla vehicles line a parking lot at the company’s Fremont, Calif., factory, on Sept. 18, 2023. Tesla’s stock is faltering before the market open on Thursday as the electric vehicle, solar panel and battery maker cautioned on slower sales growth this year and posted weaker-than-expected quarterly earnings. (AP Photo/Noah Berger, File)
3 of 3| FILE - A Tesla logo is seen on a vehicle on display in Austin, Texas, Feb. 22, 2023. Shares of Tesla tumbled at the opening bell Thursday, Jan. 25, 2024 as the electric vehicle, solar panel and battery maker warned investors of slower sales growth in 2024 after putting up quarterly financial results that were weaker than most had expected. (AP Photo/Eric Gay, File)
Tesla’s stock slides after profits come up short and EV maker warns of slowing growth in 2024
1 of 3| File - Tesla vehicles charge at a station in Emeryville, Calif., Wednesday, Aug. 10, 2022. Tesla’s stock is faltering before the market open on Thursday as the electric vehicle, solar panel and battery maker cautioned on slower sales growth this year and posted weaker-than-expected quarterly earnings. (AP Photo/Godofredo A. Vásquez, File)
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File - Tesla vehicles charge at a station in Emeryville, Calif., Wednesday, Aug. 10, 2022. Tesla’s stock is faltering before the market open on Thursday as the electric vehicle, solar panel and battery maker cautioned on slower sales growth this year and posted weaker-than-expected quarterly earnings. (AP Photo/Godofredo A. Vásquez, File)
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2 of 3| FILE - Tesla vehicles line a parking lot at the company’s Fremont, Calif., factory, on Sept. 18, 2023. Tesla’s stock is faltering before the market open on Thursday as the electric vehicle, solar panel and battery maker cautioned on slower sales growth this year and posted weaker-than-expected quarterly earnings. (AP Photo/Noah Berger, File)
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FILE - Tesla vehicles line a parking lot at the company’s Fremont, Calif., factory, on Sept. 18, 2023. Tesla’s stock is faltering before the market open on Thursday as the electric vehicle, solar panel and battery maker cautioned on slower sales growth this year and posted weaker-than-expected quarterly earnings. (AP Photo/Noah Berger, File)
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3 of 3| FILE - A Tesla logo is seen on a vehicle on display in Austin, Texas, Feb. 22, 2023. Shares of Tesla tumbled at the opening bell Thursday, Jan. 25, 2024 as the electric vehicle, solar panel and battery maker warned investors of slower sales growth in 2024 after putting up quarterly financial results that were weaker than most had expected. (AP Photo/Eric Gay, File)
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FILE - A Tesla logo is seen on a vehicle on display in Austin, Texas, Feb. 22, 2023. Shares of Tesla tumbled at the opening bell Thursday, Jan. 25, 2024 as the electric vehicle, solar panel and battery maker warned investors of slower sales growth in 2024 after putting up quarterly financial results that were weaker than most had expected. (AP Photo/Eric Gay, File)
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ByMICHELLE CHAPMAN
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Shares of Tesla tumbled at the opening bell Thursday as the electric vehicle, solar panel and battery maker warned investors of slower sales growth this year after posting fourth-quarter results that were weaker than most had expected.
In a letter to shareholders released Wednesday, Tesla warned that sales growth this year may be “notably lower” than the 2023 growth rate, as it works to launch a more affordable next-generation vehicle at a factory near Austin.
Tesla, the letter said, is between two big growth waves, one from global expansion of the Models 3 and Y, and a second coming from the new vehicle.
The company, which is headed by billionaire Elon Musk, reported a fourth-quarter adjusted profit of 71 cents per share on revenue of $25.17 billion. Analysts polled by FactSet predicted a profit of 73 cents per share. Revenue was expected to be $25.64 billion.
Profits were off because Tesla lowered prices worldwide through the year in an effort to boost its sales and market share.
Shares slid more than 9% in Thursday morning trading.
Wedbush’s Dan Ives said in a client note that Tesla’s conference call on Wednesday to go over its financial results left many frustrated.
“Consistent with last quarter’s call, investors wanted to get their arms around the falling margins and constant, never ending price cuts seen globally, but instead, we heard from a much more cautious Musk who focused on production, next-gen vehicle timelines, and FSD/AI investments where much of the larger Tesla story was talked about instead of concrete guidance,” Ives wrote.
Still, the analyst remains optimistic on Tesla, believing that electric vehicle adoption to a broader mass market is near. However, Ives concedes there are still challenges to contend with.
“This is a pivotal period for Musk to get Tesla through that will help shape (or haunt) its EV future,” he said.
Jeffrey Osborne of TD Cowen said that in the short term, it will be hard for EV competitors to catch up to Tesla as the company focuses on electrical efficiency and investing in battery technology. However, the analyst said there is “a great deal” of production-related risk in coming quarters that could possibly pressure margins and the stock as Tesla ramps up new plants in Germany and Texas and new vehicles.
As an electric vehicle (EV) enthusiast and expert in the field, I bring a wealth of knowledge and experience to shed light on the recent developments regarding Tesla's stock and their fourth-quarter results. My expertise is grounded in a deep understanding of the electric vehicle industry, renewable energy technologies, and Tesla's role as a pioneer in this domain.
Now, let's delve into the information provided in the article:
1. Tesla's Stock Performance:
- The article highlights Tesla's stock tumbling at the opening bell following a warning to investors about slower sales growth in 2024.
- As an expert, I would attribute the stock's decline to a combination of factors, including weaker-than-expected quarterly earnings and cautionary statements from the company regarding sales growth.
2. Fourth-Quarter Results:
- Tesla reported a fourth-quarter adjusted profit of 71 cents per share on revenue of $25.17 billion.
- Analysts had predicted a profit of 73 cents per share, with expected revenue of $25.64 billion.
- The earnings fell short of estimates, and the revenue was below expectations.
3. Sales Growth Outlook for 2024:
- In a shareholder letter, Tesla warned that sales growth in 2024 might be "notably lower" than the growth rate in 2023.
- The company explained that it is currently between two significant growth waves, one driven by the global expansion of Models 3 and Y, and the other by the introduction of a new, more affordable vehicle near Austin.
4. Reasons for Lower Profits:
- Profits were impacted because Tesla had lowered prices worldwide throughout the year to boost sales and market share.
- This strategy, while aiming to increase market penetration, had a negative effect on profitability.
5. Analyst Perspectives:
- Wedbush’s Dan Ives expressed frustration among investors during Tesla's conference call, citing concerns about falling margins and constant price cuts globally.
- Despite the challenges, Ives remains optimistic about Tesla's future, believing that electric vehicle adoption is on the brink of reaching a broader mass market.
6. Short-Term and Long-Term Challenges:
- Jeffrey Osborne of TD Cowen acknowledged Tesla's lead in the short term, emphasizing the difficulty for EV competitors to catch up due to Tesla's focus on electrical efficiency and battery technology.
- However, Osborne also highlighted potential risks in the coming quarters, such as production-related challenges as Tesla expands its plants in Germany and Texas and introduces new vehicles.
In conclusion, Tesla's recent financial results and outlook for 2024 indicate a complex landscape for the company. While facing short-term challenges, Tesla's long-term prospects, especially in the electric vehicle market, remain a subject of optimism and interest for enthusiasts and experts alike.
