Tesla Stock Plunged 5% After Its Earnings Disappointed The Market Once Again
AInvestThursday, Jan 25, 2024 1:45 am ET
2min read
TSLA --

On Wednesday, electric vehicle manufacturer Tesla announced its financial results for the fourth quarter of 2023: Amid a slowdown in the global electric car market growth, increased industry competition, and a series of price cuts, Tesla's revenue and profit fell short of expectations once again, with its net profit also dropped by 40% y/y.

After the release, Tesla's stock fell more than 5% after-hours, enlarging its slide to more than 17% this year.

The financial report confirmed some investors' concerns about Tesla, not just as a car manufacturer, but also as an AI company.

In the past quarter, Tesla's total revenue increased 3% y/y to $25.17 billion, but this figure is lower than the market expectation of $25.6 billion. Meanwhile, the company's net income dropped 39% to $2.485 billion, resulting in its earnings per share having a significant drop to $0.71, which is also lower than the market's expectation.

Tesla's gross margin is certainly not helping the case, as the 17.6% result is not only lower than the expected 18.1%, but also lower than the previous quarter's 17.9%, marking a new low since 2019.

However, one good sign of Tesla's performance in the last quarter was the company's free cash flow reached $2.064 billion in the quarter, a 45% year-over-year increase, and a 143% increase compared to the last quarter.

As for deliveries, in the fourth quarter, Tesla delivered 484,500 vehicles, with Model 3 accounting for 95%. This is 20% higher compared to last year. The production volume also reached 495,000 vehicles, marking a 13% year-over-year boost.

Notably, Tesla did not give delivery guidance for 2024 and warned that the growth rate of production/delivery might significantly slow down.

Tesla also shared its views on some of the company's products: As for Tesla's most anticipated vehicle, the electric pickup Cybertruck, the company states that its production ramp-up process will be much longer than other models due to its complex manufacturing process. It can currently produce over 125,000 vehicles per year but did not disclose how many pickups have been sold.

Regarding the new model, most likely the Model B (tentatively named), which costs only half of the Model 3, Tesla pointed out that multiple teams are researching and developing in Texas. Musk pointed out that the new model will be low-cost and is expected to go into production in late 2025.

For the widely anticipated autonomous driving, Tesla said the FSD V12 version launched in December last year could begin a new era of autonomous driving by using AI to drive the vehicle. However, the software is not a true full self-driving one as it still requires human steering.

On the conference call, Musk was asked if he should feel uneasy because he said he wanted to own 25% of Tesla's shares. This comment was referring to his recent tweet, where he said that before making Tesla a leader in the AI and robotics field, he wanted to control 25% of the voting rights.

In response, Musk said during the call that he supports Tesla adopting a dual share structure, and he hopes to acquire more Tesla shares to increase his influence. He does not wish to be in a position of being removed by some random shareholder advisory firm and has pointed to Institutional Shareholder Services (ISS) and Glass Lewis as groups creating challenges.


$TSLA(TSLA)

Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.