Tesla shares miss Q4 earnings, warns production growth rate 'significantly slower' than 2023

Tesla reported Q4 revenue that missed estimates and released a full-year production outlook that weighed on the stock, continuing the EV maker's slide that began earlier in the year.

For the fourth quarter, Tesla reported top-line revenue of $25.17 billion versus $25.87 billion (estimate), though revenue was up roughly 3% from a year ago. From a profitability standpoint, Tesla reported adjusted EPS of $0.71 versus $0.73 (estimated) and adjusted net income of $2.486 billion versus $2.61 billion, which the Street expects.

As for its full-year production, Tesla indicated that its “vehicle volume growth rate may be significantly lower than the growth rate achieved in 2023 as our teams work on introducing the next-generation vehicle at the Gigafactory in Texas.” Street estimates for 2024 will not reach 2.19 million, which would have been 21% higher than in 2023.

The pressure on Tesla's profits could be due to the fact that Tesla begins its cost-cutting efforts in late 2022. Tesla reported an estimated Q4 gross margin of 17.6% vs 18.1%, a big drop from a year ago and a continued decline to 17.9% in Q3.

However, Tesla noted progress on its Gen 2 platform. “With plans to begin production at the Gigafactory Texas, we are focused on bringing the next-generation platform to market as quickly as we can. This platform will revolutionize how vehicles are manufactured.” Tesla has told suppliers it wants to start production of a new mass-market EV codenamed “Redwood” in mid-2025, Reuters reported earlier today, citing four people familiar with the matter.

Headlines like the rental car company Hertz is churning out thousands of EVs, Tesla's price cuts in China, a two-week production shutdown in Berlin, and CEO Elon Musk's unnecessary deadline for a higher stake also weighed on Tesla. Its shares are down more than 15% since the start of the year, while the S&P 500 is up nearly 2%.

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Tesla earlier this month 484,507 births were reported In Q4, it beat Street estimates of 483,173 per Bloomberg. That number is an all-time record quarter for Tesla, nearly 20,000 units higher than last quarter's 466,000 units delivered in Q2 last year.

FILE PHOTO: Tesla's new Cybertruck is on display at a Tesla store in San Diego, California, United States on November 20, 2023.  REUTERS/Mike Blake/File Photo

Tesla's new Cybertruck is on display at the Tesla Store in San Diego, California on November 20, 2023. (Mike Blake/REUTERS/File Photo) (Reuters / Reuters)

For the year, Tesla reported vehicle deliveries up 38% year-over-year to 1.81 million, and production up 35% year-over-year to 1.85 million. While its 38% delivery growth rate fell short of its 50% compound annual growth rate (CAGR) target, Tesla previously said it would not reach that target due to factory shutdowns and upgrades in Q3.

Cyberdrug deliveries are also notable. Tesla did not break out this total in its Q4 delivery update, although the company said the Cybertruck production curve will take longer than other models.

Elon Musk speaks at a symposium on anti-Semitism organized by the European Jewish Association on January 22, 2024 in Krakow, Poland.  (Photo by STR/NurPhoto via Getty Images)Elon Musk speaks at a symposium on anti-Semitism organized by the European Jewish Association on January 22, 2024 in Krakow, Poland.  (Photo by STR/NurPhoto via Getty Images)

Elon Musk speaks at a symposium on anti-Semitism organized by the European Jewish Association on January 22, 2024 in Krakow, Poland. (STR/NurPhoto via Getty Images) (NurPhoto via Getty Images)

Musk warned last week that if the company is going to meet its broader AI ambitions, it needs to take more control of Tesla.

“I'm uncomfortable growing Tesla into a leader in AI & robotics without ~25% voting control. Enough influence, but not replaceable,” Musk said last week from his X account. Billionaire is a social media platform formerly known as Twitter.

“If it doesn't, I'd like to build products outside of Tesla.” It would require a new stock-based compensation plan for Musk, who is already embroiled in a lawsuit with Tesla investors over his previous pay package.

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“The Street rightly (in our view) sees Tesla as a disruptive technology leader, and if Musk goes down the path of creating his own company (separate from Tesla) for his next-generation AI projects, this would clearly be a downside. The Tesla story,” Wedbush analyst Dan Ives wrote in a note to clients last week. wrote in the note.

Press Subramanian is a Yahoo Finance reporter. You can follow him Twitter And on Instagram.

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