Tesla Stock Falls 6% on Sluggish Auto Revenue, 2024 Growth Warning

Tesla reported fourth-quarter revenue and profit figures that fell short of analysts’ expectations, leading to a nearly 6% decline in the company’s stock during extended trading. The key numbers for the quarter included adjusted earnings per share of 71 cents, missing the expected 74 cents, and revenue of $25.17 billion, below the anticipated $25.6 billion.

While total revenue increased by 3% from the previous year to $25.17 billion, automotive revenue showed only a marginal 1% growth. This modest increase was attributed in part to a decrease in the average selling price following significant price cuts globally in the second half of the year. Net income for the quarter more than doubled to $7.9 billion, or $2.27 per share, primarily due to a one-time noncash tax benefit of $5.9 billion.

Growth Reversal?

Tesla acknowledged that its vehicle volume growth in 2024 might be considerably lower than the previous year’s growth rate. The company cited ongoing efforts toward launching its “next-generation vehicle” in Texas as a factor. CEO Elon Musk, during an earnings call, addressed concerns about his desire to own 25% of Tesla, suggesting the possibility of creating a dual-class share structure to avoid being voted out by shareholders.

Musk also discussed Tesla’s humanoid robot, named Optimus, describing it as the most sophisticated robot in development globally. He claimed that Tesla’s automotive technology translates well to Optimus, considering a car as a robot on four wheels. While expressing optimism about shipping Optimus units next year, Musk did not provide specific details about their capabilities or cost.

In the energy division, Tesla reported a positive trend, with revenue rising 54% to $6.04 billion. The division focuses on selling solar energy generation and energy storage systems. The company’s “Services and Other” revenue also increased by 37% from the previous year to $8.32 billion.

Cybertrucks Sales Commenced:

During the quarter, Tesla commenced sales of Cybertrucks and anticipates a more extended ramp-up period due to the vehicle’s manufacturing complexity. Musk referred to the Cybertruck as Tesla’s “best product ever” and a “head-turner,” projecting the delivery of approximately a quarter-million Cybertrucks annually without specifying a precise timeframe. For the full year, automotive revenue reached $82.42 billion, marking a 15% increase from 2022. 

Looking ahead, Tesla faces challenges as it warns of a potential slowdown in vehicle volume growth in 2024. Elon Musk’s acknowledgment of his tendency to be optimistic on timelines adds an element of uncertainty. The mention of creating a dual-class share structure also raises questions about corporate governance. The company’s focus on the Cybertruck’s production complexity and the ramp-up timeline underscores the intricacies involved in bringing innovative products to market. While Tesla’s energy division shows promise with a significant revenue increase, ongoing scrutiny and investor concerns may impact the company’s trajectory in the evolving automotive and technology landscape.