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London
CNN
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Tesla stock plunged as much as 11% after the market opened on Thursday, wiping out the company’s $73 billion market value just hours after the company warned of slowing growth in electric vehicle sales and an existential threat from Chinese rivals.
The world’s most valuable automaker said in an earnings call Wednesday that sales growth this year could be “significantly lower” than last year as it continues to develop “next generation” cars, likely lower-priced models. “There is,” he said.
Tesla previously reported a 38% jump in deliveries last year compared to 2022, but Tesla had previously targeted annual growth of 50% on average over several years.
Tesla (TSLA)’s results last quarter were also disappointing, with adjusted earnings per share down 40% year-over-year and sales rising 3% to more than $25 billion, below market expectations.
After a series of better-than-expected results since the beginning of 2021, the company’s profits have fallen short of analyst estimates for the second consecutive quarter.
The stock doubled during 2023, but that increase was in the first half of the year, and Tesla stock got off to a slow start in 2024, falling 16% before Wednesday’s earnings report. The stock is currently trading at its lowest since April of last year.
Thursday’s intraday loss matched an unusually large one-day decline of 11.4% in late December 2022. At the time, investors were concerned about Tesla’s sales and profitability outlook, as well as the health of the U.S. economy.
Shen Qilai/Bloomberg/Getty Images
A Tesla electric car outside a showroom in Shanghai, China, in October 2022.
Tesla’s fourth quarter financial results also revealed Profit under pressure. The company’s operating profit margin nearly halved compared to the same period in 2022, to 8.2%, due in part to increased costs related to production of the Cybertruck pickup truck. Production of the new model is scheduled to begin at the end of 2023.
Dan Ives, an analyst at market research firm Wedbush, said Tesla’s earnings report provided investors with a “minimum answer” to the company’s shrinking profits.
“Musk and his team will stand up like adults on a conference call and provide us with a strategic and financial overview of ongoing price reductions, margin structures, and fluctuating demand,” he said in a Thursday memo. I was completely wrong to expect that.”
Tesla has been cutting prices for more than a year in a bid to boost sales in the face of increasing competition from rivals in China.
China’s BYD beat Tesla in the final three months of last year, selling more cars than Elon Musk’s automaker for the first time.
Musk told analysts on a conference call Wednesday that the Chinese automaker is “the most competitive car company in the world” and “will have great success outside of China.”
“Frankly, if trade barriers were not established, most car companies in the world would go out of business,” he said.
Increasing competition from BYD and other Chinese automakers could trigger anti-dumping investigations by European authorities and lead to higher tariffs on car imports from China. Dumping refers to the act of exporting goods to a country at a price that does not reflect the cost.
Garrett Nelson, senior equity analyst at CFRA Research, said Tesla’s results were “disappointing and uncharacteristic,” but he believes the company’s low-cost car launches in the next few years are “the catalyst the stock needs.” I wrote in my memo that I expected it to happen. Wednesday.
Ben Ballinger, a technology analyst at Quilter Cheviot, is also optimistic. He believes the broader economic environment is starting to favor Tesla.
“Interest rates will start to fall. This will be a real positive not only for Tesla, but also for the broader auto sector, as consumers tend to buy cars on finance,” he said in a note Thursday. is written in.
Chris Isidore contributed reporting.
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