Tesla's Earnings: Wall Street Weighs In

As Tesla (TSLA) releases its fourth-quarter and full-year 2024 financial results, Wall Street analysts are weighing in on the electric vehicle (EV) giant's performance and future prospects. The company's earnings report follows a steep rally in its stock price, tied to the election of President Donald Trump and Elon Musk's influence on the administration. However, analysts remain divided on Tesla's near-term prospects, with the brokers following the company tracked by Visible Alpha split between nine "buy," six "hold," and three "sell" ratings.

Tesla's Q4 2024 earnings report revealed that the company's revenue of $25.71 billion fell short of analysts' expectations of $27.26 billion. The company's earnings per share (EPS) of 73 cents, adjusted, also missed estimates of 76 cents. Tesla's operating margin for the quarter came in at 6.2%, narrowing from 8.2% during the same period a year earlier and 10.8% in the previous quarter. Despite the mixed results, Tesla's stock price has gained over 60% since the Nov. 5 election, reflecting investors' optimism about the company's growth potential.



Analysts expect Tesla to post revenue of $27.35 billion for the fourth quarter, with net income expected to come in at $2.33 billion, or 66 cents per share. In the same quarter last year, Tesla recorded $25.17 billion in revenue and $7.93 billion in net income, as profit was boosted by more than $5 billion in adjustments because of the "release of valuation allowance on deferred tax assets." Earlier this month, Tesla stock was hit as the company's production and delivery numbers for the quarter came in short of expectations, giving Tesla its first year-over-year decline in full-year vehicle deliveries in the company's history.



Analysts from Wedbush, Morgan Stanley, and Piper Sandler recently lifted their price targets for Tesla stock to $550, $430, and $500, respectively. The Wedbush analysts noted that they believe the company could benefit from Musk's proximity to Trump's administration during its second term. Trump's administration could provide an easier regulatory path to things like approval for new versions of Tesla's self-driving software and for its autonomous "robotaxis" to hit the road, the analysts wrote. Piper Sandler analysts said they believe investors will have a clearer picture of Tesla's future this time next year, when the timeline for things like new product releases, new versions of the company's self-driving software, and its other AI projects could be more definitive. Oppenheimer analysts, however, said the link between Trump and Musk could be jeopardized if projects like Musk's "DOGE" cost-cutting effort for the government aren't as successful as the pair hope it will be.



As Tesla looks ahead to 2025, Elon Musk forecasted a 20% to 30% growth in automotive sales, buoyed by the new Model Y and lower-priced vehicles that are expected to be launched this year. The plan to launch an initial AI-trained self-driving robotaxi service by late 2025 is another focal point. Musk has claimed that Tesla's autonomous software will outperform human drivers in the first half of 2025, making any updates in this area highly significant for investors. Tesla's energy storage business has also emerged as a bright spot, with Q4 deployments reaching a record 11.0 gigawatt hours, demonstrating the company's successful diversification beyond automotive sales.



In conclusion, Wall Street analysts are divided on Tesla's near-term prospects, with some expressing optimism about the company's growth potential and others cautioning about potential headwinds. Despite mixed earnings results, Tesla's stock price has rallied since the U.S. election, reflecting investors' optimism about the company's future. As Tesla continues to innovate and expand its offerings, analysts will be closely watching the company's progress and adjusting their expectations accordingly.