Tesla's (TSLA.US) guidance sparks optimism, driving its stock price higher after hours despite concerns over Q4 earnings.
1min read After a challenging 2024, Tesla (TSLA.US) expects its vehicle sales to rise this year, offsetting the impact of lower-than-expected fourth-quarter profits, sending the stock up after hours.
Data showed Tesla's adjusted fourth-quarter earnings per share of 73 cents, below analysts' average estimate of 75 cents.
The electric vehicle maker noted that advances in vehicle autonomy technology and new vehicle plans would drive the company to "return to growth in 2025." Tesla also forecast in its fourth-quarter earnings released on Wednesday that AI, software and fleet profits would accelerate.
The outlook eased concerns about the EV market. Tesla reported earlier this month that its vehicle sales had fallen for the first time in more than a decade. However, Tesla did not commit to the ambitious targets that CEO Elon Musk recently proposed, which forecast a 30% increase in sales this year.
Tesla's stock rose 4.37% after hours on Wednesday, recovering from earlier losses. The stock has risen more than 80% since the company's last earnings report, highlighting investors' positive view of Tesla's past performance and using the company as a proxy for Musk's own prospects.
Musk has increasingly involved himself in new projects, from his social media company X to his support of former President Donald Trump and his role in cutting U.S. government spending.
Tesla said its plans to sell more affordable vehicles were still on track and expected to begin production in the first half of this year. The Cybertruck is also expected to go on sale in 2026.
The company said it planned to produce new vehicles using a combination of existing production methods and next-generation platforms. The strategy would result in higher costs than previously expected, but would allow Tesla to more effectively expand vehicle production during "uncertain times."
The company generated $692 million in revenue from selling regulatory credits to automakers that need to comply with strict pollution standards. The figure was lower than the $739 million reported in the previous quarter.
Analyst Garrett Nelson of CRFA said investors were positive on Tesla because the outlook appeared more stable after a tough 2024.
"The bar has been lowered to a more achievable level, so they're more likely to hit their targets," Nelson said.
He added that Musk's close relationship with Trump was positive because Tesla focused on autonomous driving and the possibility of changing U.S. federal regulations.
"Musk has Trump's ear. He's going to be a major player in the regulatory framework, and we think that's going to be good for Tesla," Nelson said.
