After A Surprising 2023, Tesla Warns 2024 Will Be Slower — And Investors Have Reason to Worry – The Average Joe
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    After A Surprising 2023, Tesla Warns 2024 Will Be Slower — And Investors Have Reason to Worry

    Rhea Lobo

    January 25, 2024

    Now that EVs are “woke,” will Tesla (NASDAQ:TSLA) go broke? In its Q4 2023 earnings report, America’s largest automaker hinted at softer  electric vehicle (EV) demand and forecasted “notably” slower growth in 2024 — a reversal from their earlier comments about growing “as quickly as possible.”

    That’s bad news for Tesla, which otherwise recorded a banner 2023. It reported nearly $97B in revenue, a 13% boost from 2022. However, it struggled through the back half of 2023 as sales and profits dwindled, leaving investors feeling like it’s not magnificent enough to hang with the other Magnificent Seven stocks.

    Wheels off: Signs of trouble include a meager 3% quarterly sales upswing alongside a steep profit decline. $TSLA has fallen even faster, down 26% this year (and it’s not even February). That has the most expensive megacap stock swerving towards a concrete wall, with its valuation acting as the on-ramp.

    • Analysts have long called out $TSLA for being too expensive compared to traditional carmakers like GM (NYSE:GM) and Ford (NYSE:F), which trade at 5x and 7x, respectively.
    • Tesla’s 61x forward price-to-earnings ratio doubles that of the Nasdaq-100’s 30x and is the highest among the Magnificent Seven.

    Tesla vs. the world

    Making matters worse, Tesla’s market share is being taken by lower-cost rival BYD (OTCMKTS:BYDDY) — which CEO Elon Musk has warned would “demolish most other [automakers]” (WSJ). The Cybertruck’s debut failed to impress investors, and Musk is hoping its next generation of cheaper vehicles will.

    • With the Model 3 and Y now widely available, Tesla positions itself “between two major growth waves” (WSJ). The automaker expects its next revenue boost to come from a $25K vehicle codenamed “Redwood.”
    • Additionally, the EV manufacturer plans to halve its production costs by improving its assembly process, a move which could help push vehicle prices down or boost profits.

    Musk demands more: Chinese automakers aren’t the only ones taking $TSLA hostage. Musk has threatened to work on AI-related projects outside of Tesla unless he controls “at least 25%” of the EV giant, which could lead to significant new stock issuances, forcing ardent supporters to choose between accepting dilution or risking missing out on a potential rebound.

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