Tesla’s disappointing earnings report on Tuesday highlighted the company’s challenges in meeting analyst expectations. Tesla reported a profit of $0.45 per share in the first quarter of 2024, falling short of the average analyst estimate of $0.49 per share. Additionally, Tesla’s revenue of $21.3 billion was lower than the forecasted $22.22 billion. This marks the company’s first top-line contraction since 2020, with a year-over-year revenue growth of -12%. Furthermore, Tesla’s adjusted EBITDA of $3.38 billion is its lowest since 2021, down 21% from the same period last year.
Despite missing expectations, Tesla’s stock rallied considerably after the earnings report, with shares soaring 7% in limited activity. This positive reaction was attributed to the company’s emphasis on its pathway to sustainable growth, highlighting plans to introduce new and more affordable products. This reassurance helped alleviate concerns about the potential abandonment of its cheaper electric vehicle model in development. The market responded positively, with Tesla’s stock paring its 41% year-to-date loss through Tuesday’s trading hours.
Tesla is coming off two consecutive quarters of double earnings misses, a challenging feat considering the historical data in the S&P 500. Only 38% of S&P 500 companies have missed quarterly sales forecasts in the last 30 years, while 20% have fallen short of profit estimates. This trend reflects the struggles Tesla has faced in meeting analyst expectations for sales and profits, leading to increased pressure on the company to deliver strong financial results.
Earlier this month, Tesla reported lower-than-expected vehicle deliveries for the first quarter, signaling demand issues for electric vehicles globally, particularly in China. The company’s ongoing price cuts on its vehicles have further exacerbated the situation, impacting its near-term earnings potential. As Tesla’s core electric vehicle business experiences challenges, investors are turning their attention to the company’s autonomous driving and robotaxi initiatives. However, some experts caution that this pivot may not be enough to offset the struggles in Tesla’s core business.
In 2024, Tesla has lost more than $330 billion in market value, equivalent to the combined market capitalizations of major automakers such as Ford, General Motors, Honda, Volkswagen, and BMW. This significant loss underscores the challenges facing the company as it grapples with demand issues, price cuts, and missed earnings estimates. As Tesla seeks to navigate these challenges and restore investor confidence, the upcoming earnings call is expected to provide further insights into the company’s strategies for sustainable growth and profitability.
