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- Tesla’s fourth-quarter earnings report disappointed investors, sparking a steep sell-off on Wall Street.
- The carmaker has seen $50 billion in market value erased after posting results.
Some Wall Street analysts are calling Tesla’s latest earnings call with investors an utter failure, and they’re warning of potentially tough times ahead for the EV-maker.
The Elon Musk-headed carmaker reported fourth-quarter results after the closing bell on Wednesday, disappointing investors with below-expected profits and revenue, and a grim warning of a production slowdown. Tesla pulled just $25.17 billion over the fourth quarter, lower than the forecasted $25.87 billion. Adjusted earnings per share clocked in at $0.71, down from estimates of $0.73.
The stock immediately tanked 4% after the release, which steepened to around 8% Thursday morning. That amounts to around $50 billion of market value being wiped out.
Here’s what Wall Street analysts are saying about the Tesla’s results – and the outlook for the EV-maker going forward:
Dan Ives, Wedbush Securities
Tesla just gave investors a “train wreck” of a conference call, as Musk and his team of executives failed to step up to the plate and give investors the reassurance they need, Wedbush said.
“We were dead wrong expecting Musk and team to step up like adults in the room on the call and give a strategic and financial overview of the ongoing price cuts, margin structure, and [fluctuating] demand,” a team of analysts led by Wedbush’s Dan Ives said in a note on Thursday. “Instead we got a high level Tesla long term view with another train wreck conference call.”
Analysts pointed to the vague guidance issued around Tesla’s profit margins and expensive structure. Musk seemed “much more cautious,” the firm said, as he largely focused on Tesla’s production, new vehicle timelines, and AI investments.
Wedbush remained bullish on Tesla over the long term, and estimated deliveries could grow 17% year year to around 2.1 million. The firm trimmed its price target from $350 to $315 a share, implying a potential upside of 51%.
“The long term story is intact for Tesla and we truly believe EV adoption to a much broader mass market is around the corner,” strategists said. “HOWEVER the near-term Category 4 hurricane around price cuts and lack of granularity, guidance, and communication from Musk and Tesla is a bitter pill to swallow for the bulls.”
Victoria Greene, G Squared Private Wealth
Tesla could be losing focus over what kind of company it is, according to G Squared Private Wealth Management CIO Victoria Greene.
“If you listen to the earnings call today, they talked about everything else except manufacturing cars,” Greene said in an interview with CNBC, pointing to the extensive discussion regarding AI, Tesla’s Optimus bot, and other of its future projects while issuing vague guidance on its car sales.
That’s an issue, Greene suggested, given that 94% of Tesla’s revenue is generated from its car sales.
“If they’re trying to pivot to this AI company … that’s a big shift in revenue,” Greene said. “Anytime you might have a company going through a little bit of an identity crisis I get a little bit worried about how much profit and growth [is] continuing.”
Tesla stock more than doubled in 2023, largely due to Wall Street’s excitement for artificial intelligence. Investors dumped their cash into AI-related bets, putting Tesla among the market’s best-performing stocks.
Gene Munster, Deepwater Asset Management
Tesla’s results have dampened some optimism for the stock’s most bullish investors.
“This was the most sobering outlook I have seen from Tesla,” Deepwater managing partner Gene Munster said in an interview with CNBC on Wednesday.
Revenue growth will likely come in around 10% this year, Munster estimated, a drop he thinks could take the stock down around 5% to 10% this year.
Investors will probably need to wait a year before Tesla’s growth momentum could return. The company could see just 10% growth in its production and delivery volume this year, but that could scale to around 30% growth in 2025, Munster estimated, partly due to the anticipated release of Tesla’s next-gen vehicle.
“If you do believe in the future [of EVs], then this punky, soft guidance they’re giving for this year is ultimately going to prove to be noise, because everything that Tesla’s doing — building this next generation vehicle platform, everything that they’ve done for their investments and their autonomy — all that comes at a time when traditional auto is stepping back,” he said, adding that he believe Tesla would be in a better position over the long-term than traditional carmakers.
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