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Tesla Crashes

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  • Misses Top & Bottom line and profit margins
  • Warns vehicle volume will be “notably lower”

Tesla shares came crashing down over 7% in extending trading as the Electric Vehicle (EV) car company reported lower-than-expected earnings for Q4 2023.

Revenue came at $25.17 billion, missing analyst estimates of $25.87 billion. At the same time, adjusted earnings per share (EPS) was $ 0.71, lower than the consensus of $0.73, and adjusted net income was $2.48 billion vs. $2.61 billion expected by the Street.

Gross Margins also missed the mark, coming at 17.6% instead of the 18.1% expected.

Tesla’s decline in profit margins can primarily be attributed to its strategy of cost reduction initiated in late 2022, where the focus shifted towards enhancing sales volumes through price reductions. This move consequently negatively impacted its profitability.

In terms of its full-year production, Tesla issued a huge red flag that its “vehicle volume growth rate may be notably lower than the growth rate achieved in 2023, as our teams work on the launch of the next-generation vehicle at Gigafactory Texas,” indicating it would not reach street estimates of 2.19 million for 2024, which would have been a 21% increase from 2023.

Source: Company Financials

Furthermore, the EV company did not issue any forward guidance on its future growth rate in a rare move.

Previously, tesla aimed for a long-run growth rate on its vehicles of 50%; over the last ten years, it has averaged 54%.

However, over the last few years, Tesla’s growth rate has continued to slump as Tesla transitions from high growth to a more modest growth company.

The recent reductions in Tesla’s pricing have had a notable impact, as the company reported that, on average, its vehicles sold at lower prices in the fourth quarter compared to the same period in the previous year.

The EV company is facing a lot of headwinds, including intensified competition that leads to price wars, a slump in the EV demand, supply issues, and an overall challenging macro environment.

On top of that, Tesla also reiterated that it expects the Cybertruck ramp to be “longer than other models given its manufacturing complexity.”

On the positive side, Tesla expects a “next-generation low-cost vehicle” to begin producing at its factory in Texas toward the end of 2025. A mass-market electric vehicle that could be described as a compact crossover.

All in all, Elon’s sales pitch failed to convince investors that its company is in the transition phase and that the growth slump will be temporary; as Tesla’s stock continues to decline, it is down over 27% in the last month.

Investors can long Tesla using our 1x Tesla, 2x Tesla, 3x Tesla.

Alternative, investors can shot Tesla using our -1x Tesla, -2x Tesla, -3x Tesla.

Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

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