Topline
Tesla fell far short of expectations in its eagerly awaited earnings report Tuesday afternoon, but its stock rallied considerably as the company emphasized its pathway to sustainable growth.
Elon Musk, center, has overseen an unusually rocky stretch at Tesla.
Key Facts
Tesla’s $0.45 profit per share was far short of average analyst estimates of $0.49 earnings per share in the first quarter of 2024, according to data compiled by FactSet, and its $21.3 billion of revenue was also well below forecasts of $22.22 billion in gross revenue.
Tesla’s -12% year-over-year revenue growth marks its first top line contraction since 2020 and its $3.38 billion adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) is its lowest since 2021, down 21% from the same period last year.
Yet, shares of Tesla soared 7% in limited activity after the report, paring the stock’s 41% year-to-date loss through Tuesday’s normal trading hours.
The initial positive reaction appeared to be linked to the company’s affirmation it will “introduce new and more affordable products” on its way to “profitable growth,” apparently massaging fears about the abandonment of its cheaper electric vehicle model in development, though the company’s upcoming earnings call will likely provide further color.
Surprising Fact
Tesla is coming off of two straight quarters of double earnings misses (reporting results below consensus analyst estimates for sales and profits). That’s a brutal feat considering only 38% of S&P 500 companies have missed quarterly sales forecasts over the last 30 years and 20% of firms have fallen short of profit estimates, according to LSEG data.
Key Background
The limping Tesla reported its first-quarter vehicle deliveries earlier this month, coming in far below expectations as the company grapples with demand issues for electric vehicles globally, especially in China. Lagging vehicle sales, coupled with Tesla’s relentless cuts to its sticker prices, created the borderline disastrous setup for Tesla stock as the company’s near-term earnings power dries up. With the struggles in the firm’s core electric vehicle business, Tesla optimists have increasingly turned their attention toward the potential of Tesla’s autonomous driving and robotaxi initiatives, but experts warn this pivot is behind the pain as some fundamental-focused investors “throw in the towel” on Tesla.
Big Number
More than $330 billion. That’s how much market value Tesla has lost in 2024. That’s roughly equivalent to the aggregate combined market capitalizations of Ford, General Motors, Honda, Volkswagen and BMW.
