Wednesday Apr 24 2024 12:06
6 min
Tesla disclosed significant declines in quarterly profit and revenue in its latest earnings call on Tuesday, confirming some of investors’ worst fears. The new data, however, didn’t seem to have any impact on Tesla stock.
TSLA shares rallied on renewed promises of an affordable EV model, previously dubbed the “Model 2”, by early next year, alongside continued investment in a future robotaxi fleet. Tesla previously said that its new EVs would come around late 2025.
In a note cited by MarketWatch, RBC Capital Markets' analyst Tom Narayan said:
"Tesla's Q1 numbers were background noise on the earnings call”.
As of 11:15 GMT on Wednesday, Tesla stock was up 12.7% in premarket, trading at $163.14. Despite the recent rally on the “affordable EV” news, the company’s shares have slid by close to 42% year-to-date.
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During a post-earnings call, CEO Elon Musk hinted that a refresh of Tesla's lineup might come as soon as the end of 2024. He revealed that the upcoming models would be “more affordable” and primarily built on Tesla’s next-generation EV platform.
Tesla also warded off fears of potential production halts and cost overruns by claiming that these new vehicles would be manufactured on the same production lines as current models.
As noted by The Verge’s Umar Shakir, it remains unclear as the specifics of the “affordable” vehicle:
“Although Tesla is again promising to release cheaper EVs, it hasn’t confirmed whether entirely new cheap models will come. It’s possible cheaper models could just be stripped down Model 3 and Model Y vehicles, which alone drive the majority of the company’s revenues”.
For the first quarter, Tesla reported a 9% drop in sales and a 48% decline in adjusted profits compared to the same period in 2023. The company earned $1.13 billion, or 34 cents per share, down from $2.2 billion, or 73 cents per share, a year earlier. Adjusted earnings were 45 cents per share.
Revenue fell to $21.3 billion, underperforming expectations. Analysts surveyed by FactSet had anticipated adjusted earnings of 49 cents per share on $22.2 billion in sales.
Tesla stock was badly beaten up coming into the call, down close to 42% this year. Shares were also down about 17% since Tesla reported weaker-than-expected first-quarter deliveries of about 387,000 units.
Tesla’s Q4 earnings call in January was described as a “trainwreck”, with multiple analysts, such as Morgan Stanley’s Adam Jonas, cutting their price targets on Tesla stock.
Despite a dismal start to the year, TSLA shares have attempted comebacks several times, most recently on the back of tweets from company CEO Elon Musk. Last week, however, Tesla stock slid for six straight days following the announcement of a mass Cybertruck recall due to an issue with the accelerator pedal.
On Tuesday, Tesla admitted that EV sales around the globe are struggling while car makers pivot back toward hybrids — which is “not the right strategy”, according to Musk.
“We’ll talk about this more on August 8th,” Musk said, as he stressed that 7 million cars by the end of this year will be part of a robotaxi fleet. August 8th is the date Tesla plans to unveil a new robotaxi vehicle.
“We prefer the industry to continue pushing EV adoption,” the company said in a news release. “To support our growth, we have been increasing awareness and expanding vehicle financing programs.”
One of the report’s key lines is that growth will be supported by new vehicles:
“We have updated our future vehicle line-up to accelerate the launch of new models ahead of our previously communicated start of production in the second half of 2025”.
Barron’s reporter Al Root offered an insight into the market’s optimism on Tesla stock after the call:
“The translation: Tesla's long-awaited Model 2 is coming sooner than expected. That is what's making investors happy”.
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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.
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