You’re here action fell by more than 12% Thursday after the company missed analysts’ fourth-quarter revenue and profit estimates and predicted “significantly lower“Electric vehicle sales growth this year. The gout, which took 82 billion dollars relative to Tesla’s market capitalization, was the worst one-day performance for shares of Elon Musk’s electric vehicle giant since the 21% plunge seen in September 2020 – and analysts were quick to criticize The direction.
Dan Ives of Wedbush Securities, a noted Tesla bull, said in a Thursday note that the company’s earnings call left Wall Street with “minimal answers and a lot of questions and frustration once again.”
Investors were looking for details regarding falling margins and the seemingly “endless” series of Falling prices of electric vehicles at Tesla, Ives said, but instead they got a “more cautious” Musk who focused on producing next-generation electric vehicles as well as investments in fully autonomous driving and AI.
“We were completely wrong to expect Musk and his team to step in like the adults in the room and provide strategic and financial insight into ongoing price cuts, margin structure and price fluctuation. request,” Ives wrote. “Instead, we got a high-level long-term view of Tesla with another train wreck conference call.”
Fragile income
Tesla on Wednesday reported fourth-quarter revenue of $25.17 billion, well below Wall Street’s estimate of $25.64 billion, and an increase of just 3% from the previous quarter. ‘last year. At the same time, the company’s gross profit margin, which has been the main concern of investors in recent quarters amid repeated falls in electric vehicle prices, fell to 17.6%, from 23. 8% for the same period last year. Add prospects for ‘significantly lower’ growth in electric vehicle sales in 2024 compared to 2023, and it was a “bitter pill to swallow” for Tesla shareholders, Ives said.
On the call, Tesla warned that it was stuck “between two major growth phases” as it develops next-generation electric vehicles, fully autonomous driving technology and AI and robotics offerings. On this front, Musk said it was “rather likely” that Tesla’s $25,000 entry-level electric vehicle would launch as soon as late 2025, but offered only “relatively cursory feedback” on its new humanoid robot, Optimus, and beta driving tests fully autonomous, according to Morgan Stanley analyst Adam Jonas.
The long term story
Despite the poor earnings report, Wedbush’s Ives maintained his buy-equivalent “outperform” rating on Tesla shares. He lowered his 12-month price target from $350 to $315, arguing that the potential for further EV price cuts and the lack of concrete margin and sales guidance amounted to a “Category 4 storm” for the company. But overall, he said he believes Tesla’s long-term growth remains intact and that mass market adoption of fully autonomous driving technology and electric vehicles will ultimately boost Tesla’s profits. the company.
“Our near-term confidence in the story is shaken, but we remain firm on a long-term bullish thesis around Tesla and the broader AI story that is expected to take hold. This is a pivotal time for Musk to lead Tesla through and one that will help shape (or haunt) its electric vehicle future,” he wrote.
CFRA Research analyst Garret Nelson also remains optimistic. Nelson reiterated his “buy” rating for Tesla on Wednesday, arguing that low-cost, mass-market electric vehicle production in 2025 “could be the catalyst the stock needs.”
“While the earnings miss was disappointing and unusual, as a low-cost U.S. producer of electric vehicles and with pricing appearing near an inflection point, we see significant earnings leverage for TSLA,” he wrote.
On the other hand, Tesla bears have been firing on all cylinders this week. Gordon Johnson, founder and CEO of GLJ Research, argued Thursday note that Tesla’s fourth-quarter numbers show it’s simply a “struggling automaker,” not the high-growth AI, robotics and green energy powerhouse that we’re seeing his supporters.
Johnson maintained his “sell” rating and $23.53 price target on Tesla, representing an 87% downside potential, and argued that Musk was nothing more than “the seller of shady (most successful) used cars in the world.”
This story was originally featured on Fortune.com
