It was mostly bad news from Tesla (NASDAQ:TSLA) in its latest quarterly readout. The EV giant missed both on the top-and bottom-line in its 4Q23 print.
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Revenue climbed by 3.5% year-over-year to $25.17 billion, falling shy of the Street’s forecast by $590 million as the steep price cuts taken during the period played their part in lowering ASPs (average selling prices). On earnings, adj. EPS of $0.71 also came in short of the consensus estimate, by $0.03. For the full-year, adj. EPS dropped by 23% to $3.12.
And the outlook? Well, here’s the thing, that remains a bit of a mystery, as acknowledged by long-term Tesla bull, Morgan Stanley’s Adam Jonas. “The FY24 outlook was the least detailed we remember ever published in a FY Tesla shareholder letter,” said the analyst.
Other than to say FY23’s 38% volume growth would be substantially below that in 2024, the outlook did not include any ranges on volume. Nor was there any talk of tailwinds/headwinds regarding gross margin, opex or capex.
Jonas, however, does offer his own interpretation as to why the company’s outlook was largely absent from details. “It expresses a combination of 3 factors,” said the analyst: “(1) a recognition of the fact that the EV market is slowing leaving industry supply > demand, (2) an uncertain economic/ regulatory environment compounded by political events and China consumer slowdown; and (3) the company-specific focus on developing the next generation product which may drive a continued rise in development costs relative to revenues.”
While the focus for the year will be on the next gen vehicle, Jonas is anticipating FY24 to be a challenging year for the global auto industry and one which will bring a “material drop” in Tesla’s profitability to the region of $2 in adj. EPS.
“Bottom line,” Jonas summed up, “For Tesla shares to perform from here, investors must expect FY24 to be a trough year for auto profitability, must have increased confidence in the introduction of new models, and must see tangible proof that the AI side of the story is bearing fruit.”
All in, Jonas maintained an Overweight (i.e., Buy) rating for Tesla shares and kept his $345 price target intact. The implication for investors? Upside of ~86% from current levels. (To watch Jonas’s track record, click here)
Overall, the Street’s analysts are split into different factions when considering Tesla’s prospects. With a total of 10 Buys, 11 Holds and 5 Sells, the consensus view is that this stock is a Hold. However, going by the $228.94 average target, a year from now, Tesla shares will be changing hands for a 23% premium. (See Tesla stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
