Tesla Shares Fall as Earnings Miss Expectations and 2024 Outlook Slows
Tesla, the renowned electric carmaker led by CEO Elon Musk, experienced a significant drop in its shares during pre-market trade on Thursday. This decline came after the company reported earnings that fell short of expectations and issued a warning about a potential slowdown in 2024. As a result, Tesla’s shares plummeted by approximately 8% at around 6:33 a.m. ET.
The primary cause for concern was Tesla’s financial performance, which failed to meet market expectations. In the fourth quarter of 2023, the company’s closely-watched metric, automotive revenue, only reached $21.6 billion, representing a mere 1% year-on-year increase. However, the most alarming aspect was Tesla’s outlook for the future. The electric car manufacturer stated that vehicle volume growth in 2024 could be significantly lower than the previous year due to its focus on launching its “next-generation vehicle” in Texas. Tesla explicitly cautioned investors that it currently finds itself “between two major growth waves.”
In 2023, Tesla successfully delivered 1.8 million cars. To combat rising competition from Chinese players like BYD and traditional automakers, the company has implemented price cuts in key markets across Europe and China. Unfortunately, these price reductions have negatively impacted Tesla’s margin, further exacerbating the challenges it faces.
Adding to the pressure on Tesla’s stock, several brokers have revised their price targets for the company. Barclays, for instance, reduced its price target from $250 to $225. In a note on Thursday, Barclays analysts stated, “Not as bad as feared, but a cloudy path ahead reinforces some downside risk for now.” RBC analysts also adjusted their price target from $300 to $297. Similarly, Canaccord Genuity lowered its price target from $267 to $234 in a note released on Wednesday.
Tesla’s recent earnings report and cautious outlook have undoubtedly raised concerns among investors. The company’s struggle to meet market expectations and the potential slowdown in 2024 have led to a significant decline in its stock value. However, it remains to be seen how Tesla will navigate these challenges and whether it can regain its momentum in the coming years.
[Image: Kirsty Wigglesworth | Reuters]
[Source: CNBC]