Tesla shares were sharply lower in the US premarket after the electric car maker headed up by Elon Musk released soft earnings pointing to a slowdown in sales growth and said margins would come under pressure.
Tesla said sales growth would be ‘notably lower’ in the near term – a major disappointment for investors accustomed to substantial growth rates.
Despite the launch of the long-awaited Cybertruck, adjusted EBITDA was 27% lower in Q4 2023 compared to the same period a year ago.
Compounding problems for the EV maker, margins were being pressured by a price war with Chinese competitors that has led to erratic pricing strategies.
“When you consider the miss on gross margins in the fourth quarter, there is a danger Tesla is facing the worst of both worlds with an erosion of its leading market share – surrendered to Chinese rival BYD in 2023 – and its profitability,” said Russ Mould, investment director at AJ Bell.
“Gross margins are now a long way short of their peak levels at 29.1% in the first quarter of 2022 and are now roughly on a par with some of the traditional carmakers which trade on less lofty valuations.”
Tesla shares were down 8% in the US premarket at the time of writing.
This seems like a technically very pivotal earnings report for $TSLA.
— Sven Henrich (@NorthmanTrader) January 24, 2024
Bulls see a massive inverse, but need a save.
Bears are seeing a potential trend line break.
The stock has seen 6 weekly red candles in a row (rare) and is pretty oversold on the daily. pic.twitter.com/orKMLzkm0R
“Elon Musk may have apologised for not having a crystal ball, but investors would probably settle for a lesser attempt at forecasting. Sales are expected to drop as the EV specialist looks to find a place to land between two so-called growth waves,” said Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown.
“The re-emergence of plans for a lower-priced vehicle speaks volumes about the pressures being faced as price wars wage on. The tougher dynamics have led to there being no guidance on specific delivery targets in 2024.
“The tide isn’t turning against electric vehicles, but it has become less helpful. The higher costs of buying electric are putting consumers off at a time when cost of living pressures and uncertain economic conditions are pushing big-ticket purchases further down the road.”
