Last year marked significant growth for Tesla (NASDAQ:TSLA), witnessing the stock more than doubling and delivering one of its strongest annual performances. However, the beginning of 2024 has seen a weakened TSLA, experiencing a nearly 16% decline in its market capitalization. Despite this dip, Tesla’s performance stands resilient compared to other electric vehicle (EV) startups like Rivian (NASDAQ:RIVN) and Lucid Motors (NASDAQ:LCID), the latter reaching record lows recently. Chinese EV stocks, including NIO (NYSE:NIO) and Xpeng Motors (NYSE:XPEV), are grappling with the ongoing sell-off in Chinese stocks.
Tesla, the leading player in the EV market, is set to release its Q4 earnings on January 24, following the closing bell. In this preview, we delve into what to anticipate from the report and whether the current decline in TSLA stock presents a buying opportunity.
Key Points for Tesla’s Q4 Earnings
Revenue and Earnings Outlook: Analysts project a modest 6% year-over-year increase in Tesla’s Q4 revenues to $25.78 billion. However, there’s an expected 44% drop in earnings per share to $0.60, attributed to Tesla’s strategic price reductions impacting both its margins and those of fellow automakers.
2024 Delivery Guidance: Observers will closely monitor Tesla’s 2024 delivery guidance. The company’s delivery growth in 2022 and 2023 fell below the long-term 50% CAGR mentioned by CEO Elon Musk. Analysts anticipate a 20% revenue increase in 2024, suggesting a substantial deviation from the 50% delivery growth target.
Operating Margin Progress: Following aggressive price cuts in Q3, Tesla’s operating margins hit an eight-quarter low at 8%. Investors seek insight into whether the company has established a margin floor, considering ongoing price cuts in 2024.
Cybertruck Production and Low-Cost Model Updates: Markets will focus on updates regarding the production ramp-up of the Cybertruck and any developments on the long-awaited low-cost model.
German Plant and Supply Chain Impact: Tesla’s temporary production halt in Germany due to Red Sea attacks and supply chain disruptions raises concerns. The company may provide updates on the German plant and the financial repercussions of the production suspension. Attention may also turn to Tesla’s upcoming plant in Mexico.
Musk’s Compensation: Elon Musk’s recent declaration that he would only feel comfortable building AI products at Tesla with a 25% stake may lead to questions about his compensation during the earnings call. Despite not receiving a fixed salary or bonus, Musk’s previous pay package, currently under judicial review, was valued at $56 billion.
Stock Forecast: Analysts exhibit a cautious outlook with a “Moderate Buy” consensus rating for Tesla, and a mean target price of $241.25, representing a 13.9% increase from current levels. However, some analysts, including TSLA bull Adam Jonas, have lowered their target prices, expressing concerns about the challenging outlook for Tesla in 2024.
Investor Sentiment and Considerations
Despite bearish sentiments preceding Tesla’s Q4 report, the recent stock decline could present an opportunity for investors who believe in Tesla’s broader narrative beyond electric cars. As the company transitions into a prominent player in the artificial intelligence (AI) realm under Elon Musk’s leadership, potential investors should weigh the risks, including Musk’s compensation ultimatum, and carefully assess their confidence in the long-term Tesla story.
Featured Image: Pexels
Author Faith Yakubu 
