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Tesla's Shares Rally Despite Earnings Miss. What's Fueling Investor Belief?
After the closing bell on Wednesday, January 29, $Tesla (TSLA.US)$ unveiled its eagerly awaited Q4 2024 earnings. Interestingly, despite the fact that most of the financial and operational figures fell short of expectations, with only a few segments like energy somewhat above forecasts, Teslashare price surprisingly rose. After a brief dip in after-hours trading, it surged, climbing more than 6% at its peak. It appears that Elon Musk's AI narrative has once again overshadowed the impact of declining EV sales, successfully bolstering investor confidence.
Review of Tesla's EarningsDespite slightly surpassing expectations in both the energy and services sectors, Tesla's overall revenue and gross margin fell short due to weak performance in its automotive revenue.
In the fourth quarter, Tesla's revenue increased by 2% year-over-year to $25.71 billion, underperforming analysts' projections of $27.44 billion. Additionally, the adjusted EPS for the quarter stood at $0.73, also missing the anticipated $0.75. The shortfall in operating revenue was primarily attributed to the underperformance of its core automobile sales business.
Automotive Sector: This quarter, automotive revenue reached a mere $19.8 billion, falling significantly short of the market's anticipated $25 billion. This discrepancy is primarily due to the company's strategic initiatives to boost electric vehicle demand, which included low-interest financing, inventory clearance, and promotional discounts. These measures led to a reduction in the average selling price of the Model 3, Y, S, and X series, with declines exceeding market expectations. Although Tesla managed to reduce the cost per vehicle to below $35,000 through economies of scale and raw material savings, it was not sufficient to offset the impact of the price reductions. Consequently, the automotive segment's gross margin hit an all-time low of 13.6%, considerably below the forecasted 16.2%, thereby dragging down the overall gross margin.
Looking ahead, the company anticipates a return to positive growth in vehicle sales by 2025, driven by advancements in autonomous driving technology and new model plans. While this somewhat alleviates concerns about EV sales, it starkly contrasts with the ambitious 20%-30% sales growth target for 2025 that Tesla outlined in the previous quarterly earnings call. This discrepancy suggests that the introduction of the next-generation affordable Model 2.5 might still face uncertainties in its impact on sales growth. Additionally, regional market share challenges persist, casting doubt on the optimism surrounding the EV business.
Energy Sector: The energy division is among the few bright spots, with fourth-quarter energy generation and storage revenue surging to $3.06 billion, marking a 113% year-over-year increase. Storage deployments continued on a robust upward trajectory, with a nearly 60% sequential growth, reaching 11 GWh. As the Shanghai energy storage megafactory begins mass production in the first quarter of 2025, Tesla projects a further 50% year-on-year increase in storage deployments for that year.
The Market's Positive Reaction: What Investors Are Buying IntoDespite underwhelming earnings results, the stock's initial decline followed by a rise indicates that investors remain engaged in the debate between the diminishing prospects of traditional automotive ventures and the promising new growth drivers. It appears that the market is still inclined to invest in Elon Musk's AI narrative, placing greater emphasis on advancements in Full Self-Driving (FSD), the deployment of Robotaxis, and the production plans for Optimus. The clearer timeline for affordable vehicle models has also bolstered sentiment. Over the past year, Tesla has made significant investments in infrastructure, laying the groundwork for its next growth phase, including increased vehicle manufacturing capabilities, AI training computational power, and energy storage production capacity.
Progress on Affordable Models: The initiative to sell more affordable vehicles is progressing steadily, with production anticipated to commence in the first half of this year. Additionally, the Cybercab is expected to debut by 2026.
FSD and Robotaxi: The anticipated improvements in FSD performance and its penetration rate are crucial to Tesla's valuation in 2025. During the earnings call, the company highlighted that 2025 will be pivotal for Tesla as FSD continues to undergo rapid enhancements, ultimately unlocking an unsupervised FSD option and advancing the Robotaxi business. Tesla plans to launch a fully autonomous FSD version in Austin, Texas, by June this year, which will then be expanded across the North American market by 2027. Meanwhile, the company intends to introduce a supervised FSD version in China and Europe by 2025, serving as a significant catalyst for future stock performance.
Optimus Production Plans: The Optimus robot is projected to begin deliveries in the latter half of 2026, with the company expressing confidence that the production costs will fall below $20K when mass production is achieved.
A Look at Tesla's Seasonal Strength and Other DriversOver the past 15 years, Tesla's stock performance in January has typically been strong, with an average increase of about 5.8%, surpassed only by gains in November, June and April. Beyond this seasonal optimism in trading sentiment, the relationship between Elon Musk and Donald Trump has further fueled speculation regarding regulatory leniency and potential valuation enhancements for the company. While the repeal of Biden's electric vehicle tax credit by Trump had a devastating impact on other industry peers, Tesla's relative advantage in the automotive sector remains somewhat supported from this perspective.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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103768083 : People are paying attention to expectations, and Tesla's depiction of the future is very good and exciting
TheCarmelizer : I heard that!
vchong888 : Well, well well, what's new with Elon, besides missing revenue and facing a challenging 2025 in China, likely removal of all green initiatives and subsidies, Tesla rises to the occasion post earnings, I am bearish on Tesla given Musk will be distracted with D. O. G. E., tariffs on components from China, DeepSeek will only weaken xAI, probable delay in rollout of robotaxis and Cybercab, business as usual and mission to Mars. There's only 24 hours in a day.
Frozenjs : elon & musk are the similar breed. excel in blowing trumpet & selling big rosy dreams.
Aivern : simps. sales failing but all elon needs to do is promise some bs with a bs timeline and everyone of his fanboys will lap it up lol. dude hasnt actually done anything successfully since the first gen teslas.
Derpy Trades : Promises promises promises. That's what the current valuation of Tesla is built upon. What happens if they can't deliver on those promises?
Chak : its not called rally
104212897 : Moomoo MY 2025 Lucky Angpao Try Your luck to win RM888*>> https://j.moomoo.com/02enHB
张一点 : Short-term tempting long positions. There are still stories to be told in the medium to long term.
74764890 : Tesla's stock market value depends on Musk's mouth.
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