Tesla Suffers a Dip in Stock Due to Q4 Earnings Miss and Lower 2024 Production Forecast

Tesla's Q4 earnings, falling short of estimates, prompted a steep fall in stock value. The company's forecast of a lower full-year production for 2024 added to the concerns. However, Tesla CEO Elon Musk confirmed that the production of the next-generation vehicle would begin in the latter half of 2025.

The company announced a Q4 top-line revenue of $25.17 billion, slightly lower than the predicted $25.87 billion. However, there was a yeary increase in the revenue by approximately 3%. The adjusted EPS stood at $0.71, compared to the estimated $0.73. The adjusted net income also fell short by about $0.124 billion, with the actual being $2.486 billion against the expected $2.61 billion.

Tesla has warned that its vehicle volume growth rate for 2024 might be considerably lower than what it achieved in 2023. This prediction stems from the company's resolute focus on launching the next-generation vehicle at Gigafactory Texas, disrupting expectations of achieving the Street estimates of 2.19 million productions for 2024, a 21% rise from 2023.

The company seems eager to bring the next-gen platform to the market promptly, touting the revolutionary nature of the manufacturing system of the new Texas Gigafactory. Musk alluded to a target production date for their new "revolutionary" low-cost vehicle within the second half of 2025.

This vehicle, known as "Redwood," signals an intent to tap into the mass-market EV segment, a fact that Reuters had earlier reported. This announcement confirms the timeline for the aforementioned vehicle's production.

The company's profitability dip is likely attributable to the slip in gross margins in Q4 of 2022, down to 17.6% from an estimated 18.1%. This decline wraps up a challenging year for Tesla, marked by setbacks including Hertz rental car firm shedding thousands of EVs, ceasing production in Berlin for two weeks, and price reductions in China.

Tesla reported 484,507 deliveries for Q4, surpassing estimates of 483,173. This number set a new quarterly record for the company, up by nearly 20,000 units from their previous best of 466,000 units in Q2. Over the year, Tesla increased their vehicle deliveries by 38% to 1.81 million and production rates by 35% to 1.85 million. These increases, however, fell short of the company's 50% compound annual growth rate (CAGR) target, primarily attributed to factory shutdowns and improvements made in Q3.

Regarding Cybertruck deliveries, Musk stated the production ramp would take longer than expected. Nonetheless, he mentioned, "Cybertruck demand is off the hook," echoing previous year's statements.

In the earnings call, Musk addressed concerns over his control at the helm of Tesla. His fear is rooted in the potential of major shareholders making undesirable decisions, given his shareholdings. He expressed concern about being voted out by shareholder advisory firms, such as Institutional Shareholder Services (ISS) and Glass Lewis, hence the bid for more influence and control over decisions.