Tesla's stock slides after profits come up short and EV maker warns of slowing growth in 2024 (2024)

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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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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 - 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)

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.

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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.

I'm an enthusiast deeply entrenched in the world of electric vehicles, particularly Tesla. Having closely followed the developments in the electric vehicle industry and Tesla's trajectory, I find myself in a unique position to provide insights into the recent news regarding Tesla's stock performance, sales growth concerns, and quarterly financial results. My extensive knowledge comes not only from monitoring news sources but also from an in-depth understanding of the technology, market dynamics, and the strategic moves made by Tesla.

Let's delve into the concepts mentioned in the article:

1. Tesla's Stock Performance:

   • Tesla's stock is facing challenges, as indicated by its decline at the opening bell.
   • The decline is attributed to Tesla's cautionary statements about slower sales growth in 2024.
   • The stock is reacting to weaker-than-expected quarterly earnings.

2. Sales Growth Warning:

   • Tesla, in a letter to shareholders, warned of slower sales growth in the current year compared to the growth rate in 2023.
   • The slowdown is linked to the company's focus on launching a more affordable next-generation vehicle near Austin.

3. Fourth-Quarter Financial 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 at $25.64 billion.
   • Profits were impacted by Tesla's global strategy of lowering prices throughout the year to boost sales and market share.

4. Factors Affecting Profits:

   • Tesla's decision to lower prices worldwide led to a decline in profits.
   • The company's strategy aimed at increasing sales and market share.

5. Investor Sentiment:

   • Tesla's conference call discussing financial results left some investors frustrated.
   • Concerns were raised about falling margins, constant price cuts, and a cautious tone from Elon Musk, the company's head.

6. Analyst Perspectives:

   • Dan Ives from Wedbush expressed frustration among investors about the lack of clarity on falling margins and ongoing price cuts.
   • Despite the challenges, Ives remains optimistic about Tesla's future, emphasizing the nearing adoption of electric vehicles in the mass market.
   • Jeffrey Osborne of TD Cowen acknowledges Tesla's short-term advantages in electric efficiency but highlights production-related risks as the company expands with new plants and vehicles.

In conclusion, the recent challenges faced by Tesla reflect a complex interplay of market dynamics, global expansion, pricing strategies, and the company's ambitious plans for new vehicle launches. While concerns exist, analysts remain cautiously optimistic about Tesla's long-term prospects in the electric vehicle market.