Tesla stock drops as electric vehicle maker throws ‘curveballs’ at bulls

Shares of Tesla Inc. traded on Thursday at their lowest level since October, as investors looked beyond strong quarterly results to worry again about the automaker’s production deadlines, promises and constraints. electrical.

Tesla TSLA stock,
closed down 11.6%, at $829.10, for its lowest close since Oct. 14, when it closed at $818.32, and the biggest one-day percentage drop in a fell 21% on September 8, 2020. Stock losses dragged the company’s market capitalization to around $832 billion.

Tesla reported fourth-quarter earnings well above the Wall Street consensus on Wednesday evening, and shares traded immediately after the release as the company revealed its factories had been operating below capacity for months due to power issues. Supply Chain.

However, the stock price reversed, as chief executive Elon Musk sought to assuage those production concerns, saying he forecast production growth “comfortably” above 50% in 2022.

He kept light on short-term issues, however, and spent much of the hour-plus conference call talking about driverless Teslas, which he promised by the end of this year. potential fleet of robotaxis and humanoid robot Tesla unveiled in August.

Some 12 hours after the results, some analysts were bored by this lack of detail.

The results threw a few “curve balls” on the Tesla bulls, Jeffrey Osborne told Cowen in a note Thursday. Musk’s ‘rant’ on (Full Self Driving) brings back flashbacks to 19 when YE20 promised 1 minute of robotaxis,” he said.

Tesla shares “tend to do better when something new comes along,” Osborne said. Significant production of its new vehicles, such as the Cybertruck and commercial electric truck, is pushed back to 2023 and there is no “Model 2”, a cheaper electric vehicle of around $25,000, in development. did he declare.

Investors expected Tesla to discuss its product roadmap over the next year, B. of A. Securities analyst John Murphy said in his note. Instead, the outlook for 2022 and beyond “was relatively vague”.

Tesla’s production growth forecast was “encouraging” but somewhat confusing as Tesla continued to stress that supply chain challenges remained a constraint, Murphy said.

“Additionally, we anticipated that in its 2022 outlook, (Tesla) could provide more details on the start of production and the expected ramp schedule at its Austin and Berlin facilities, but little guidance. definitive information was provided other than the current state in both factories, which was disappointing.

Others took a more optimistic view. “Tesla’s long-term history is intact,” said Morgan Stanley’s Adam Jonas. Tesla is on track to become a 10-plant company producing up to 1 million vehicles per plant by 2030, he said.

The call reinforced Tesla’s focus on scale as it ramps up capacity at its five factories, Baird’s Ben Kallo said.

Musk pointed to “several technological advancements,” he said. “Although these have already been discussed, the comment seemed to indicate that some were closer to market than before. We remain buyers.

While Tesla reiterated “optimism” about its driverless Full Self Driving system, Goldman Sachs analyst Mark Delaney said he and his colleagues remain “watched.”
how quickly the business can achieve full self-sufficiency given industry delays
widely (including Tesla) encountered historically on (self-driving vehicles). »

The lack of progress on a $25,000 EV could raise questions about Tesla’s growth over the next year as more EVs around that price hit the market, Delaney said. For now, however, Tesla can count on “significant growth to come with its current models,” he said.

Tesla’s results were “strong, but not a blowout,” Toni Sacconaghi said with Bernstein in his note. “Elon Musk’s highly anticipated product update was a little underwhelming,” he said.

And while Tesla executives have emphasized FSD, fully autonomous driving “has and will likely continue to take longer to deliver than Tesla realizes, for technical and legal reasons,” Sacconaghi said.

Tesla shares have underperformed the broader index over the past 12 months, with the stock now down 0.8% compared to gains of around 17% for the S&P 500 SPX index,
during this period.

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