Tesla
stock had a tough Thursday after the company reported worse-than-expected fourth-quarter earnings—and Wall Street can’t hide its disappointment.
Wednesday evening, Tesla reported earnings per share of 71 cents. Wall Street was looking for 73 cents. What’s more, Tesla management said automotive sales growth in 2024 would be substantially below 2023.
They weren’t more specific than that. Vehicle sales grew almost 40% year over year in 2023, hitting 1.8 million units. Wall Street expects 2.1 million to 2.2 million units for 2024, up about 20%. That growth rate is below the 40% rate of 2023, but analysts would have felt better if Tesla guided to a firm number.
Now analysts have weighed in after digesting the fourth quarter report and vague volume guidance for 2024—and they aren’t impressed.
“We were dead wrong expecting Musk and team to step up like adults in the room on the call and give a strategic and financial overview of the ongoing price cuts, margin structure, and fluctuating demand,” wrote Wedbush analyst Dan Ives in a Thursday report. “Instead we got a high-level Tesla long-term view with another train wreck conference call.”
The “train wreck” had Tesla stock down 12% to $182.63 on Thursday, its worst days since Jan. 3, 2023. The
S&P 500
gained 0.5% and the
Nasdaq Composite
advanced 0.2%.
Ives still rates Tesla shares Buy, but he cut his price target to $315 from $350 a share. RBC analyst Tom Narayan rates shares Buy too, but cut his target price a more modest $3, to $297 from $300 a share after the Tesla earnings call.
“We leave our delivery estimates unchanged after the vague guide, but lower our car gross margin expectations on less robust cost down opportunity,” wrote the analyst in a Wednesday evening report, adding that Tesla’s next-generation vehicle platform—a lower price Tesla EV—is “many quarters away” from impacting numbers.
“With recent price cut, margins likely fall in 2024,” wrote Wells Fargo analyst Colin Langan in a Wednesday evening report.
Tesla’s automotive gross profit margins, excluding regulatory credit sales, came in at about 17.1% in the fourth quarter, up from 16.3% in the third quarter of 2023. Analysts, coming into the earnings report, were forecasting margins of almost 18% for 2024. Those estimates are at risk now.
Langan rates shares Hold and cut his target price to $200 a share from $223.
There have been at least seven price target cuts from Wall Street analysts following the conference call. Bernstein analyst Toni Sacconaghi didn’t cut his price target though. He rates shares Sell and kept his $150 price target for Tesla stock. Sacconaghi wrote that 2024 will be a challenging year and it’s “increasingly apparent that 2025 will likely not be better.”
Tesla management seems to agree with him about 2024. Tesla bulls hope he is wrong about 2025.
After all the cuts, the average analyst target price for Tesla stock is down to about $226, about $12 lower than the pre-call level, according to FactSet.
Coming into Thursday trading, Tesla stock was off about 16% year to date. More price cuts and weakening EV demand have weighed on investor sentiment.
Write to Al Root at allen.root@dowjones.com
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