The recent Q4 earnings report from Tesla showed that the company missed estimates and issued a downbeat full-year production outlook. This trend has contributed to a continued downtrend for the EV-maker that has been ongoing since the start of the year. These earnings figures and production predictions have an impact on Tesla’s stock performance in the automotive industry.
Tesla reported a top-line revenue of $25.17 billion for the fourth quarter, falling short of the expected $25.87 billion. However, revenue did increase by approximately 6% from the previous year. In terms of profitability, Tesla reported an adjusted EPS of $0.71, coming in slightly below the estimated $0.73, and an adjusted net income of $2.486 billion, missing the $2.61 billion expected by the Street.
The company also indicated that its full-year production may not meet previous estimates, with the growth rate expected to be lower due to its focus on the launch of the next-generation vehicle at Gigafactory Texas. This means that Tesla may not reach the Street estimates of 2.19 million for 2024, which would have represented a 21% increase from 2023.
One contributing factor to Tesla’s drop in profitability is the downward pressure on margins, which began when Tesla initiated cost-cutting efforts in 2022. The company’s Q4 gross margin of 17.6% fell short of the estimated 18.1%, showing a significant decline from the previous year and a sequential drop from the 17.9% achieved in Q3.
Despite these challenges, Tesla has expressed commitment to advancing its gen-2 platform and bringing the next-generation platform to market quickly, starting with production at Gigafactory Texas. The company aims to revolutionize vehicle manufacturing with this new platform. Additionally, Tesla has indicated plans to commence production of a new mass-market EV in mid-2025, codenamed “Redwood”.
However, Tesla has faced some negative press, including headlines about the rental car firm Hertz shedding thousands of EVs, Tesla reducing prices in China, and facing a two-week production halt in Berlin. Additionally, CEO Elon Musk’s recent demand for more stock has impacted the company. As a result, Tesla’s shares have fallen by over 15% since the beginning of the year, contrasting with the S&P 500’s nearly 2% increase.
On a more positive note, earlier this month Tesla reported a record 484,507 deliveries in Q4, surpassing Street estimates. This represents an all-time high for Tesla, demonstrating a significant increase from its previous record of 466,000 units delivered in Q2 of the previous year.
Looking at the year as a whole, Tesla reported a 38% year-over-year increase in vehicle deliveries, reaching 1.81 million, and a 35% year-over-year growth in production, amounting to 1.85 million. Even though the delivery growth rate falls short of the company’s 50% compound annual growth rate (CAGR) target, Tesla previously explained that this goal was impacted by factory shutdowns and improvements that took place in Q3.
When considering Tesla’s financial results, it is important to note the anticipated impact of Cybertruck deliveries, as well as recent comments from CEO Elon Musk regarding his ownership stake in the company. Musk’s recent statements about securing greater control of Tesla to support its AI ambitions have raised questions and concerns among analysts. There is speculation about the potential implications for Tesla if Musk were to create his own company separately from Tesla to pursue his AI projects.
Analysts will be looking for clarification from Musk on his recent comments, especially regarding the long-term importance of Tesla’s AI initiatives and potential conflicts with the company’s interests. This has led to speculation about the impact on the Tesla story if Musk were to pursue a separate venture for his next-generation AI projects and the potential negative implications for the company.
Overall, with Tesla’s recent earnings and production outlook, the automotive industry will be monitoring the company’s trajectory and the potential implications of Musk’s comments for Tesla’s business. This represents a critical development in the automotive sector and will be closely watched by industry professionals and investors. For the most up-to-date news on automotive companies, financial reports, and market trends, it is important to follow reputable sources and industry experts.
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