Tesla's latest earnings call has elicited strong reactions from Wall Street analysts, with many deeming it a significant disappointment and raising concerns about future challenges for the electric vehicle (EV) manufacturer.
Led by CEO Elon Musk, Tesla reported fourth-quarter earnings that fell short of expectations in terms of profit and revenue, alongside a foreboding signal of slowing production. The company reported a fourth-quarter revenue of $25.17 billion, which was below the projected $25.87 billion. Adjusted earnings per share were also lower than anticipated, coming in at $0.71 compared to the expected $0.73.
Following these revelations, Tesla's stock experienced a sharp decline, dropping 4% immediately after the announcement and deepening to about 8% by Thursday morning. This resulted in a staggering loss of approximately $50 billion in market value.
Wall Street analysts have provided varied insights on Tesla's performance and its future trajectory:
Dan Ives, Wedbush Securities
Ives described the earnings call as a "train wreck," criticizing Musk and his team for not providing the necessary reassurances to investors. The Wedbush team had expected a more detailed strategic and financial discussion, particularly about ongoing price cuts, margin structures, and fluctuating demand. Instead, they were met with a broad, long-term perspective from Tesla, lacking in detailed guidance.
Despite these criticisms, Wedbush maintains a long-term bullish stance on Tesla, predicting a 17% increase in deliveries to around 2.1 million units. However, the firm has adjusted its price target from $350 to $315 per share, suggesting a 51% potential upside. The analysts believe that while Tesla faces near-term challenges, the broader adoption of EVs remains imminent.
Victoria Greene, G Squared Private Wealth
Greene, CIO of G Squared Private Wealth Management, expressed concerns about Tesla's potential shift in focus. She noted that the earnings call centered more on AI and other future projects rather than car manufacturing, despite car sales accounting for 94% of Tesla's revenue. Greene warned of potential risks if Tesla is undergoing an identity shift, affecting its profitability and growth trajectory.
Gene Munster, Deepwater Asset Management
Munster, managing partner at Deepwater, characterized Tesla's latest outlook as the most sobering he has seen from the company. He anticipates revenue growth of about 10% this year, potentially leading to a 5-10% decline in Tesla's stock. Munster believes that investors might have to wait until next year for a resurgence in Tesla's growth, with production and delivery volumes possibly increasing by 30% in 2025.
He remains optimistic about Tesla's long-term prospects, particularly in comparison to traditional automakers, citing Tesla's investments in next-generation vehicles and autonomy. These varied perspectives from Wall Street analysts reflect the complexity of Tesla's current situation, highlighting both the immediate challenges and the potential long-term opportunities for the company in the evolving EV market.
