Tesla Stock Plummets 12% as Q4 Earnings Miss Estimates and Full-Year Production Outlook Disappoints
Tesla, the electric vehicle (EV) giant, experienced a significant drop in its stock price on Thursday, falling 12% after the company reported its fourth-quarter earnings. The results fell short of estimates, and the full-year production outlook left investors disappointed.
In terms of revenue, Tesla reported $25.17 billion for the fourth quarter, slightly lower than the expected $25.87 billion. While this represented a 3% increase from the previous year, it still missed expectations. Additionally, the company’s adjusted earnings per share (EPS) came in at $0.71, below the projected $0.73.
The adjusted net income for the quarter totaled $2.48 billion, falling short of the expected $2.61 billion. These figures contributed to the decline in Tesla’s stock price.
Furthermore, Tesla’s full-year production outlook added to investor concerns. The company stated that its vehicle volume growth rate might be notably lower than the growth rate achieved in 2023 due to the launch of the next-generation vehicle at Gigafactory Texas. This announcement indicated that Tesla would not reach the Street’s estimates of 2.19 million vehicles for 2024, which would have represented a 21% increase from the previous year.
The disappointing earnings report and production outlook have contributed to Tesla’s stock losing more than 26% of its value this year.
During a call with analysts, CEO Elon Musk confirmed that the company’s next-generation vehicle would be released in the second half of 2025. Tesla also mentioned progress on its next-gen manufacturing platform, which Musk described as a “revolutionary manufacturing system” that would change how vehicles are manufactured.
The decline in Tesla’s profitability can be attributed to downward pressure on margins resulting from the company’s cost-cutting efforts in late 2022. Tesla reported a gross margin of 17.6% for the fourth quarter, lower than the estimated 18.1%. This represents a significant drop compared to the previous year and a sequential decline from the 17.9% achieved in the third quarter.
Several factors have contributed to the downward pressure on Tesla’s stock price. Headlines such as Hertz shedding thousands of EVs, Tesla reducing prices in China, a production halt in Berlin, and Elon Musk’s demand for more stock have all weighed on investor sentiment.
Despite the disappointing earnings report, Tesla did achieve a record quarter for deliveries in Q4, with 484,507 units delivered. This figure surpassed Street estimates and represented a nearly 20,000-unit increase from the previous record quarter in Q2 of last year.
For the full year, Tesla reported a 38% year-over-year growth in vehicle deliveries, reaching 1.81 million units. Production also grew by 35% year over year, totaling 1.85 million units. Although this delivery growth rate fell short of Tesla’s 50% compound annual growth rate (CAGR) target, the company had previously acknowledged that it would not achieve this goal due to factory shutdowns and improvements made in the third quarter.
Notably, Tesla did not provide specific figures for Cybertruck deliveries in its Q4 update. However, Musk expressed enthusiasm for the demand of the Cybertruck, stating that it was “off the hook.”
Looking ahead, Musk addressed concerns about his control over Tesla and its future AI ambitions. He expressed worry that with his current shareholding, he might have “so little influence” that a major shareholder could strip away his control or make poor decisions. Musk cited Institutional Shareholder Services (ISS) and Glass Lewis as examples of shareholder proxy advisory companies that could potentially impact his control.
Despite these challenges, Musk emphasized that he aims to be an effective steward of Tesla’s powerful technology and is not seeking additional economics.
In conclusion, Tesla’s stock experienced a significant drop following the company’s fourth-quarter earnings report. The results fell short of estimates, and the full-year production outlook disappointed investors. However, Tesla did achieve a record quarter for deliveries and expressed optimism about its next-generation vehicle and manufacturing platform. Elon Musk also addressed concerns about his control over the company, emphasizing his commitment to being an effective steward of Tesla’s technology.