Tesla’s Stock Dips as Earnings Fall Short, EV Manufacturer Signals Slower Growth in 2024

Tesla Shares Plunge Amid Sales Growth Warning

Shares of Tesla are tumbling at the opening bell as the electric vehicle, solar panel, and battery maker warns investors of slower sales growth this year after posting fourth-quarter profits that were weaker than most had expected.

Shareholder Communication Raises Concerns

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 Between Two Growth Waves

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.

Q4 Earnings Below Expectations

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.

Price Cuts Impact Profits

Profits were off because Tesla lowered prices worldwide through the year in an effort to boost its sales and market share.

Tesla Stock Suffers

Shares slid more than 9% in Thursday morning trading.

Investor Frustration after Financial Conference Call

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.

Musk’s Cautious Approach on Guidance

“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.

Optimism for Tesla’s EV Future Despite Challenges

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.

The Pivotal Period for Tesla’s EV Direction

“This is a pivotal period for Musk to get Tesla through that will help shape (or haunt) its EV future,” he said.

Competitive Edge and Production Challenges

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.