Tesla Stock Rises Despite Weak Earnings Report
Shares of Tesla (NASDAQ: TSLA) climbed today, bouncing back from a disappointing earnings report. CEO Elon Musk energized investors during the earnings call with ambitious statements about the company’s future in autonomy.
As of 1:11 p.m. ET, the stock had increased by 4.7% following the announcements.
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Image source: Tesla.
Investors Choose to Focus on Future Autonomy
Tesla reported disappointing fourth-quarter earnings, which initially caused the stock price to drop after hours. For the entire year, the company experienced a decline in automotive revenue. In the fourth quarter, total revenue grew by only 2%, reaching $25.7 billion, falling short of analysts’ expectations of $27.1 billion. Automotive revenue also dipped by 8% to $19.8 billion during this period.
The company’s earnings did not meet expectations either. Operating margin decreased from 8.2% to 6.2%, while adjusted earnings per share increased slightly from $0.71 to $0.73, missing the estimated $0.77.
Despite these underwhelming results, investors are showing optimism. Musk emphasized his vision for autonomy, stating that the stock could eventually surpass the combined value of the next five highest-valued companies. He remains confident about Tesla’s self-driving technology, predicting significant advancements by 2027 and 2028.
Commitment to Autonomy Dominates Discussion
The earnings call saw little discussion of Tesla’s automotive sales. Instead, the focus was primarily on the future of autonomous driving. While the company did not provide specific guidance, it suggested that growth in its vehicle business could resume by 2025. However, this hinges on transitioning to a new production platform, which could limit cost reductions more than anticipated.
Challenges remain for Tesla as it aims for full autonomy. Yet, investor interest suggests some confidence in the direction the company is headed. If Tesla can make advancements in autonomous technology, this could positively influence stock performance, despite notable risks.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
