Tesla shares drop 6% on weak auto revenue, warning of slower growth in 2024

Elon Musk, CEO of Tesla, speaks on the Atreju political conference organized by Fratelli d’Italia (Brothers of Italy) in Rome, Italy, on Dec. 15, 2023.

Antonio Masiello | Getty Images

Tesla reported income and revenue for the fourth quarter that missed analysts’ estimates as automotive income elevated simply 1% from a 12 months earlier. The inventory slid nearly 6% in prolonged buying and selling.

Here are the important thing numbers:

  • Earnings per share: 71 cents, adjusted vs. 74 cents anticipated by LSEG, previously generally known as Refinitiv.
  • Revenue: $25.17 billion vs. $25.6 billion anticipated by LSEG.

Total income elevated 3% from $24.3 billion a 12 months earlier. Operating margin for the quarter got here in at 8.2%, down from the year-ago quarter’s determine of 16% and barely increased than 7.6% within the prior quarter.

Meager development in auto income was partly attributable to a diminished common promoting worth following steep worth cuts world wide within the second half of the 12 months. Net earnings for the quarter greater than doubled to $7.9 billion, or $2.27 per share, from $3.7 billion, or $1.07 per share, a 12 months earlier. The enhance was principally attributable to a $5.9 billion one-time noncash tax profit.

Tesla stated in its investor presentation that car quantity development in 2024 “may be notably lower” than final 12 months’s development charge as the corporate works towards launching its “next-generation vehicle” in Texas. The firm cautioned traders that it is “currently between two major growth waves.”

CEO Elon Musk was requested on the earnings name if traders needs to be uncomfortable together with his said want to personal 25% of Tesla. The query was in reference to a latest tweet, during which Musk stated that is how a lot voting management he would need earlier than turning Tesla right into a “leader in AI and robotics.”

Musk responded by saying he would not wish to be within the place to be “voted out by some sort of random shareholder advisory board,” and he floated the opportunity of making a dual-class share construction. Musk highlighted proxy advisory companies Institutional Shareholder Services, or ISS, and Glass Lewis as teams creating challenges, alongside activists that “infiltrate” firms and “have strange ideas about what should be done.” In mentioning ISS, Musk stated he calls the group “ISIS,” referring to the Islamic State.

ISS did not instantly reply to CNBC’s request for remark.

When requested in regards to the timeline for manufacturing of Tesla’s humanoid robotic, known as Optimus, executives declined to provide any particular steering.

Musk described Optimus as, “something that I think has the potential to far exceed the value of everything else combined” for Tesla. He claimed that Tesla’s know-how developed in its automotive unit interprets properly to the humanoid robotic “because the car is just a robot on four wheels.”

Optimus is “by far the most sophisticated humanoid robot that’s being developed anywhere in the world,” Musk added. Competitors available in the market embrace Boston Dynamics, Agility Robotics and Figure. Other robotics firms comparable to Sanctuary, Apptronik, 1X, Fourier and Unitree are all engaged on dexterous manipulation {hardware}, mimicking human arms.

Musk stated Tesla has “got a good chance of shipping some number of Optimus units next year,” however he did not specify their capabilities or the associated fee. Musk admitted on the decision that he tends to be optimistic on timelines.

Cybertrucks hit the market

During the quarter, Tesla started promoting Cybertrucks to clients. The firm stated in its investor deck that, “We expect the ramp of Cybertruck to be longer than other models given its manufacturing complexity.” Tesla stated it now has the capability to construct greater than 125,000 of the autos in a 12 months. On the earnings name, Musk known as the Cybertruck “our best product ever and a “head-turner.”

“I see us delivering someplace on the order of a quarter-million Cybertrucks a 12 months,” he stated, with out giving a exact timeframe.

A Tesla Cybertruck at a Tesla store in San Jose, California, on Nov. 28, 2023.

Bloomberg | Bloomberg | Getty Images

For the full year, Tesla said automotive revenue reached $82.42 billion, a 15% increase from 2022. The energy division, which is much smaller than Tesla’s core business, was a bright spot, with revenue rising 54% to $6.04 billion. The unit sells solar energy generation and energy storage systems. Tesla’s “Services and Other” revenue rose 37% from a year earlier to $8.32 billion.

Operating income decreased year over year to $2.1 billion in the quarter, with Tesla blaming the declining profits on the reduced average sales price of its vehicles and an increase in operating expenses “partly pushed by AI and different R&D tasks.” Spending on research and development increased to $1.09 billion from $810 million a year earlier, though it was down from $1.16 billion in the prior quarter.

In its shareholder presentation, Tesla confirmed that it had rolled out a new version of its premium driver assistance software, marketed as its Full Self Driving Beta or FSD Beta option. The software doesn’t make Tesla’s cars autonomous, as they still require an attentive driver at the wheel.

As of the end of 2023, Tesla had 54,892 Supercharger connectors available to drivers around the world at 5,952 stations.

Tesla shares have dropped about 16% so far this year as of Wednesday’s close after more than doubling in 2023.

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