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Tesla Inc. shares plunged after Elon Musk’s pitch for investors to look past slower sales growth fell flat.
The stock fell as much as 10% on Thursday morning after Tesla narrowly missed earnings estimates and warned its rate of expansion will be “notably lower” this year.
The company spent all of 2023 cutting prices to boost sales, which ate into profits.
“Tesla is signaling that the days of 50% or even 30% to 40% growth year-over-year is not going to happen in 2024,” Seth Goldstein, a Morningstar Research analyst, said in an interview. “At a certain point, you can’t cut prices anymore.”
In a departure from past practice, Tesla avoided offering specific targets for the year ahead.
The company fell well short of the 50% annual growth that management guided to in the past despite slashing prices throughout 2023. Vehicle deliveries rose 38%, and analysts are predicting a 20% increase this year.
Tesla shares are having their worst start ever to a year. Thursday’s slump is the steepest intraday drop in three months, and the stock is now trading at its lowest since May.
The carmaker reported earnings of 71 cents a share for the fourth quarter, missing the 73-cents-a-share average estimate. The company generated $25.2 billion in revenue, less than the $25.9 billion predicted by Wall Street.
Musk suggested this will all be temporary. Tesla is going to build its cheaper, next-generation vehicle as soon as the second half of next year at its factory in Austin, and then in Mexico.
The company will also make the model at another site in North America. That could help the company appeal to more mass-market buyers who can’t afford the company’s existing EVs, which start at about $39,000 in the US.
“That will be a challenging production ramp,” Musk said of the next-generation vehicle. “Once it’s going, it will be head and shoulders above any other manufacturing technology that exists anywhere in the world. It’s next-level.”
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