Shares of Tesla witnessed a sharp decline of more than 10% in Thursday afternoon trading, less than 24 hours after the company reported earnings that fell below expectations and issued a warning of sluggish sales throughout the year.
According to the earnings report released on Wednesday, both revenue and profits missed analyst expectations for the three months ending in December. Despite delivering a record 1.81 million cars in 2023, surpassing previous years, Tesla experienced the impact of reduced prices amid heightened competition, exerting downward pressure on revenue.
The company acknowledged that its vehicle delivery growth in 2024 “may be notably lower,” attributing the slowdown to its focus on developing a “next-generation vehicle” expected to debut in the second half of 2025. Tesla anticipates that this advanced vehicle will catalyze a surge in sales.
Gordon Johnson, CEO, and founder of data firm GLJ Research, described Tesla as nothing more than a “struggling car company” in a note to investors, expressing a bearish outlook.
While Tesla provided an optimistic outlook, emphasizing being between “two major growth waves,” the explanation failed to alleviate concerns for some analysts. Dan Ives, a managing director of equity research at Wedbush, described the recent conference call as a “trainwreck,” expressing a shaken “near-term confidence” at Wedbush. However, Ives reiterated a long-term bullish thesis on Tesla and the broader artificial intelligence (AI) narrative.
Elon Musk’s recent statement seeking greater voting control of Tesla and the company’s ongoing government inquiries into certain technology risks in its vehicles contribute to the uncertainty surrounding the electric carmaker. Musk’s request for a 25% voting control has raised eyebrows, and Tesla has faced recalls related to safety issues with its autopilot system, affecting millions of vehicles.
The current challenges pose a “bitter pill to swallow for the bulls,” according to Ives, reflecting the complexities and uncertainties that Tesla is navigating in the competitive and evolving electric vehicle market.
