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      Tesla's earnings caused fluctuations, what's your market outlook?
      Views 6.7M Contents 554

      Tesla's awful numbers put Musk back into campaign mode

      It's a good thing for Tesla that its CEO has cozied up to Trump, because the company's latest numbers are awful.
      Tesla missed expectations with earnings of USD0.73 per share (non-GAAP) and it missed revenue expectations with USD25.707 billion during the last quarter. The Wall Street consensus for this quarter was USD27.224 billion in revenue and earnings of USD0.77 per share.
      Tesla's gross profits were down 6% year-over-year in Q4. That's despite selling more regulatory credits.
      For the full-year 2024, Tesla's earnings per share is down 22% despite many seeing Tesla as a "growth stock":
      The silver lining is that while growth has gone away, Tesla remains profitable and has grown its cash stack to USD36.6 billion.
      That's significantly below expectations. The bigger issue is that the miss would have been even worse if Tesla hadn't pulled a couple of levers.
      Another big slug of greenhouse gas credit sales combined with an unusually large dollop of "other income", due mostly to an accounting change related to Bitcoin holdings, added up to USD1.5 billion.
      Tax-adjusted, that's half of Tesla's entire earnings for the quarter right there. These earnings aren't just weak but low quality, too.
      Tesla touted a record quarter in terms of vehicle and battery sales. Somehow that translated to the opposite for its financials. The metric of automotive margin with emissions credit sales stripped out hit its lowest since at least 2018, at 13.6%.
      Average revenue per vehicle sold, excluding leases and credits, dropped below USD40,000 and gross margin on that basis slumped to about USD5,100; again, the lowest since at least 2018.
      Tesla's awful numbers put Musk back into campaign mode
      In an oblique way, Tesla spelled out the problem, albeit framed as a win. It noted high up in Wed evening's earnings report that it reduced its average cost of vehicle production to the lowest level ever at under USD35,000 apiece.
      But this draws attention to an underlying problem: Tesla's production costs are declining in tiny increments. The average drop per quarter over the past two years is less than 2%. This makes margins vulnerable in a price war - which is exactly what has happened with EVs amid slowing sales growth in the US and intense competition in China. Tesla's ageing model lineup compounds the issue.
      The result is falling prices twinned with stubborn costs and, therefore, dramatically lower margins. Consider that Tesla sold 36% more vehicles in 2024 than it did two years before, as well as far more battery capacity, and yet operating profit fell by about half.
      Tesla's awful numbers put Musk back into campaign mode
      These results are even more of a gut punch when one recalls the last earnings call. Back then, Tesla was scrambling to recover from the robotaxi unveiling event flop. Tesla reported better-than-expected results soon after, albeit more of a bottoming out than a rebound.
      But Elon Musk shifted the narrative completely by touting big growth in Q4 vehicle sales and growth of another 20-30% in 2025. Tesla's value soared by more than a fifth the next day. As it turned out, sales missed that guidance in the fourth quarter and, curiously, that 2025 target wasn't repeated with the latest results - probably a good thing given Trump's anti-EV executive orders.
      Nonetheless, the chief executive was in an expansive mood on Wed's earnings call, albeit mostly about things other than the EV sales that account for the vast majority of Tesla's revenue and profits.
      Musk declared that "the reality of autonomy is upon us", before going on to say that it wasn't quite upon us, and Tesla will launch a geofenced robotaxi service in Austin in Jun. Tesla's stock popped in after-market trading on that line, despite the fact that it simply pinpointed a month for a 2025 target Musk had already touted previously.
      Musk also didn't mention any robotaxis in California this year, as he had before - until someone asked a question. He then expressed confidence in Tesla launching unsupervised full self driving not just in the Golden State but many regions of the country. You just don't get guidance in quite this format with other companies.
      Musk's promises have to be taken with a pinch of salt as the timelines can be stretched indefinitely.
      Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only. Read more
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      • bullrider_21 OP : At the start of last year, I already predicted it would be a bad year for Tesla's deliveries. No new models, price cuts and high interest rate would affect its profit margins and results. But the market chose to focus on Musk's promises and his relationship with Trump and the stock rallied.

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