TSLA drains more than 12% following earnings miss, analyst calls it ‘overvalued’

TSLA drains more than 12% following earnings miss, analyst calls it ‘overvalued’


Tesla (TSLA) stock slumped 12.1% on Thursday, the electric vehicle (EV) company’s worst outing, percentage-wise, since January 3, 2023. Reaction to late Wednesday’s fourth-quarter results and subsequent dour 2024 outlook led to a rout for the company run by CEO Elon Musk.

Tesla stock closed at $182.63, a price level investors haven’t seen since May of last year. In the post-market TSLA stock slid further below $182.

The rest of the market left Tesla behind as US GDP outperformance reported for Q4 sent equities rallying. The NASDAQ Composite closed up 0.18%, while the Dow Jones was helped by IBM (IBM) results to power 0.64% higher.

However, poor results from Intel (INTC) and Visa (V) after the close on Thursday have set the NASDAQ up for a down session heading into Friday as the futures market skids. NASDAQ futures fell some 0.6% afterhours.

Tesla stock earnings news: Management focuses on future, while 2024 outlook appears vague

Tesla earned $0.71 per adjusted share, a 3 cent miss for the fourth quarter, and underperformed its revenue consensus by nearly $600 million.

Revenue rose 3.5% from a year ago, which was viewed as a major slowdown for a company known for regularly seeing annual sales growth of more than 30%. For instance, in the fourth quarter of 2022, revenue rose 37% YoY. But price cuts across Tesla’s various models reduced revenues throughout 2023, cutting into the fourth quarter’s top line.

One highlight from the quarter was that free cash flow grew from $1.42 billion one year ago to $2.06 billion. However, capex trended higher from $1.86 billion a year ago to $2.3 billion in the fourth quarter. Management said that capex in 2024 would increase to $10 billion.

Analysts were nonplussed by the management team’s uncertainty regarding its outlook for 2024. Gone were the normal absurdly ambitious projections from Musk. Instead, Musk and other executives focused on the company’s broad outlines for its AI and robotics units. They spoke long about new full self-driving software but less about near-term targets.

Even the bulls’ bull, Wedbush analyst Dan Ives, cut his price target from $350 to $310, citing near-term uncertainty regarding automotive demand. Ives called the conference call a “train wreck”. Roth MKM analyst Craig Irwin, a noted bear, reiterated his price target of $85.

“We continue to see Tesla’s stock as egregiously overvalued,” Irwin wrote.

Much of the discussion dealt with Musk’s pressuring of the board to grant him 25% ownership of the company, and Musk brought up the possibility of a dual-class stock structure.

Tesla stock forecast

Tesla stock saw volumes rise 68% on Thursday above the usual 117 million shares exchanging hands, nearly eclipsing 200 million in the regular session. The only near certainty is that TSLA stock will continue this downtrend. The only question is when and where the bottom is found.

Tesla stock sank to a price level last seen in May, and normally positive analysts like Adam Jonas of Morgan Stanley said the lack of guidance specifics would likely weigh on TSLA stock at the start of the year.

Both bears and bulls will focus on two historical support levels. These are $167.50 and $154. The $167.50 level supported reduced demand for TSLA stock in March and May of 2023. $154 was the ultimate bottom during that downtrend that reached a nadir that April.

Of note, the weekly chart shows the 13-week Simple Moving Average trending below its 26-week counterpart since last October. This means that the weekly chart has been telegraphing weakness in TSLA price action for some time. Now the distance between those moving averages will expand. It could take a few weeks for consolidation to set in despite the fact that TSLA stock has already reached oversold conditions on the daily chart.

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