Tesla Stock Decline: Earnings Fall Short

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Strong Net Income Amidst Challenges

Despite Tesla’s net income more than doubling in the last quarter, reaching $7.93 billion from October to December 2023, the company experienced a drop in its stock value. The surge was primarily attributed to a one-time tax benefit. However, factors such as price reductions on electric vehicles and a slowdown in sales growth impacted profits.

Excluding One-Time Benefits

Excluding one-time items like the $5.9 billion noncash tax benefit, Tesla’s earnings amounted to $2.49 billion, or 71 cents per share. This figure marked a 39% decrease from the previous year, falling short of analysts’ expectations. Analysts, as per FactSet data, anticipated earnings of 73 cents per share. The market response was evident as Tesla’s shares fell by 3% after the closing bell on Wednesday.

Revenue and Sales Growth

Tesla reported quarterly revenue of $25.17 billion, reflecting a 3% increase from the previous year. However, this figure fell short of analyst estimates, which predicted revenue at $25.64 billion. The sales growth rate for the full year was 37.7%, lower than CEO Elon Musk’s predicted 50% growth rate. Tesla delivered 484,507 vehicles in the quarter, with the majority being the more affordable Models 3 and Y.

BYD Surpasses Tesla in Q4

Tesla faced tough competition as Chinese electric vehicle manufacturer BYD overtook it as the world’s top-selling electric vehicle company in the fourth quarter. Despite the challenges, Tesla expressed confidence in the future. The company cautioned that sales growth in 2024 might be notably lower as it focuses on launching a next-generation vehicle at its Texas factory.

Growth Waves and Cybertruck

Tesla outlined two significant growth waves in its shareholder letter: the global expansion of Models 3 and Y and a second wave from the next-generation vehicle. The company expects the Cybertruck deliveries to ramp up throughout the year, acknowledging that the ramp-up process might be longer due to manufacturing complexity. Additionally, Tesla anticipates energy storage revenue growth to outpace the automotive business in the coming year.

Full Self-Driving Software Update

During the fourth quarter, Tesla released the latest version of its “Full Self-Driving” software to employees and selected customers for testing. The new version incorporates artificial intelligence to control steering and pedals, a departure from hard-coding all driving behaviors. However, the system still necessitates driver intervention, and owners must be ready to take control at all times.

SOURCE: Ref Image from The Guardian

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