During Tuesday, all eyes will be on CEO Elon Musk. teslaThe company's (TSLA) first-quarter earnings release comes as investors look for clarity and insight into Musk's strategy and whether he will explicitly rebrand Tesla. TSLA stock rose on Tuesday.
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It has become increasingly clear in recent weeks that Musk and Tesla are shifting their focus more towards self-driving, fully self-driving (FSD) and robotaxi programs as EV demand slows in 2024. ing.
Wall Street may get some answers when Tesla's first-quarter results and earnings are released later Tuesday.
Last week, Tesla announced plans to lay off more than 10% of its global workforce, with key executives leaving the company, which Musk said was part of its next “phase of growth.”
The job cuts come after Reuters reported on April 6 that Tesla was switching focus from its $25,000 next-generation Model 2 to prioritize work on its robotaxi program. In response to this report, Musk quickly announced that Tesla would unveil its robotaxi on August 8th.
Musk also told X (formerly Twitter) on April 6, “Tesla is an AI/robotics and sustainable energy company.'' Tesla's chief executive has long said the company is more than just a car company, but his recent declarations signal a shift away from being a car brand.
A key question in Tesla's earnings release is whether Elon Musk will shelve the Model 2 for a few years.
Last week, Tesla asked shareholders to approve Musk's $56 billion 2018 compensation plan, despite a Delaware court invalidating the plan earlier this year. The general meeting of shareholders is scheduled for June 13th. “I would be uncomfortable with building Tesla into a leader in AI and robotics without approximately 25% voting control,” Musk wrote on X in January.
Tesla stock: Withdrawal from EV business
TSLA stock rose 0.6% to 142.75 during market trading on Tuesday. Tesla stock fell 3.4% to 142.05 on Monday, hitting a 52-week low of 138.80 during the day. Meanwhile, Cathie Wood and her Ark Invest Fund bought 122,752 shares of Tesla stock on Monday, according to daily trading disclosures.
Mr. Wood is increasing Ark's Tesla stake in anticipation of 2024. Cathie Wood has long been bullish on Tesla's self-driving drive and robotaxis.
Tesla shares fell about 2% on Friday and plummeted 14% for the week, dropping below their April 2023 low.
Deutsche Bank analyst Emmanuel Rozner said Thursday that Tesla's future is tied to “breaking the code for full self-driving technology,” which is a “major technical, regulatory and operational challenge.” said.
The analyst said the shift in focus to robotaxis is a “theory change” and that robotaxis will lead to EV investors “throwing in the towel” and “ultimately being replaced by AI/technology investors.” It added that the company could experience a “painful transition of its ownership base”. It's a fairly long time frame. ”
Meanwhile, Morgan Stanley analyst Adam Jonas wrote on Wednesday that Tesla “appears to be exiting” the traditional electric vehicle industry.
“This doesn't mean Tesla won't continue to sell cars (including new releases) for years to come,” Jonas added.
Prepare for Q1 earnings
Few details about Mr. Musk's strategy for robot taxis and next-generation vehicles have investors and analysts nervous ahead of the company's first-quarter earnings release, scheduled for after the market closes on Tuesday. .
Analysts expect first-quarter profits to decline more than 42% to 49 cents a share and revenue to decline nearly 5% to $22.22 billion. If Tesla's first-quarter EPS is as expected, it would be the lowest quarterly level since the EV giant posted 48 cents per share in the second quarter of 2021. This is the first year-on-year revenue decline since the early days of the pandemic.
Tesla recently changed its full self-driving from FSD Beta to Supervised FSD. This suggests that the EV giant may recognize more deferred FSD revenue, boosting EPS. As a result, Tesla's cash flow will be an important number to watch in the first quarter.
Tesla also began offering a free FSD trial with new car purchases in April. And over the weekend, the EV company cut its annual FSD price by 33% to $8,000. The move comes two weeks after he lowered FSD's monthly subscription fee from $199 per month to $99 per month.
Tesla reported in early April that global deliveries totaled 386,810 vehicles in the first quarter, with production totaling 433,371 vehicles. The deliveries include a total of 369,783 Model 3 and Model Y vehicles, as well as 17,027 “other” vehicles. Tesla delivered 386,810 vehicles in the first quarter, which was lower than even the lowest expectations and the lowest quarterly deliveries since 344,000 in the second quarter of 2022.
The EV giant blamed its first-quarter performance on problems with ramping up production of the new Model 3 due to factory closures.
Meanwhile, Tesla's Q1 delivery release also saw the company include Tesla Energy totals for the first time, another sign that the global EV giant is officially changing or expanding its focus. became.
Vehicle prices continue to drop even after discounts disappear
Tesla also returned to lower vehicle prices over the weekend, cutting EV prices in the U.S., China and Europe.
In the U.S., Model Y pricing currently starts at $42,990 before taxes and fees, excluding incentives. The entry price for the Model S is $72,990, while the Model X starts at $79,990. Model Y and Model X are eligible for a $7,500 Inflation Control Act (IRA) credit.
Prices for the Tesla Cybertruck and Model 3 remain unchanged, and production volumes of both EVs are still low. This comes after Tesla last week eliminated all discounts in the U.S. on existing in-stock models. Therefore, the effective price of Model Y in the US is higher than it was a week ago.
“Other cars have their prices constantly and often drastically changed through dealer markups and manufacturer/dealer incentives,” Musk wrote on X Sunday. “Tesla's price has to change frequently to match production and demand.”
To maintain sales momentum in 2023 and 2024, TSLA aggressively reduced vehicle prices and offered discounts. Automotive gross margins, excluding regulatory credits, reached 30% in the fourth quarter of 2021 amid the industry's chip shortage, but remained well below 20%.
Tesla stock price performance
TSLA stock plunged 14% last week to 147.05, its worst level since January 2023. Tesla shares are now down more than 19% in April after falling about 13% in March.
Last week, TSLA rose nearly 4%, buoyed by Elon Musk's promise to unveil robotaxis on August 8th. But Tesla stock is currently down more than 40% in 2024, with the stock trading well below its 50-day and 200-day prices. moving average line.
Tesla stock has plummeted in 2024, but at least it's cheaper, right?no
Meanwhile, Tesla shares have been down for nearly 900 days, marking the second long decline since its initial public offering in 2010, said Charlie Bilello, chief market strategist at Creative Planning.
The Wall Street consensus is that Tesla's profits in 2024 will be well below 2023 levels. This suggests that this growth stock's returns will decline further. Wall Street currently expects Tesla to earn just $2.66 per share in 2024, according to FactSet. This is a drop of more than 14% compared to last year's $3.12.
Wall Street's consensus 2024 EPS estimate for Tesla is currently down 30% from the end of 2023.
Looking further ahead, the Wall Street consensus is for Tesla's EPS of $3.62 in 2025, below the expected $5.29 at the end of 2023, according to FactSet.
The EV giant ranks eighth in the IBD auto manufacturing industry group of 35 companies. His overall rating for Tesla stock is 28 out of 99. Tesla stock also has a Relative Strength Rating of 10 and an EPS Rating of 67.
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