Home Forex Lack of 2024 guidance sends TSLA to lowest level since May 2023

Lack of 2024 guidance sends TSLA to lowest level since May 2023

by SuperiorInvest


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  • Tesla shares fell more than 12% on Thursday after missing the top and bottom lines.
  • Fourth-quarter results showed further weakening in demand as sales growth slowed.
  • The EV leader’s sales rose just 3.5% year-over-year.
  • Wedbush Securities cuts price target to $310 from $350.

Tesla (TSLA) shares fell 12.13% on Thursday, the worst percentage since Jan. 3, 2023. The reaction to Wednesday’s fourth-quarter results and subsequent unfavorable outlook for 2024 led to the defeat of the company led by CEO Elon Musk.

Tesla shares closed at $182.63, a price level investors haven’t seen since May of last year. The rest of the market left Tesla behind when the US GDP outperformance reported for the fourth quarter was posted stocks rally. The NASDAQ Composite closed up 0.18%, while the Dow Jones helped IBM performance results 0.64% higher.

Tesla Stock Earnings News: Management Focuses on Future While 2024 Outlook Looks Vague

Tesla earned $0.71 per adjusted share, or 3 cents, for the fourth quarter, beating its consensus on revenue by nearly $600 million.

Revenue rose 3.5% from a year earlier, which was seen as a major slowdown for a company known for regular annual revenue growth of more than 30%. For example, in the fourth quarter of 2022, sales increased by 37% year-on-year. However, price cuts across Tesla’s various models reduced revenue throughout 2023, peaking in the fourth quarter.

One of the highlights of the quarter was that free cash flow rose to $2.06 billion from $1.42 billion a year ago. But investment rose from $1.86 billion a year ago to $2.3 billion in the fourth quarter. Management said capital spending will rise to $10 billion in 2024.

Analysts were baffled by the management team’s uncertainty about its outlook for 2024. The usual absurdly ambitious projections from Musk were gone. Instead, Musk and other executives focused on the company’s broad outlines for its AI and robotics units.

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

“We continue to see Tesla stock as extremely overvalued,” Irwin wrote.

Much of the discussion dealt with Musk pushing the board to give him 25% ownership of the company, and Musk mentioned the possibility of a dual share structure.

Frequently Asked Questions about EV Shares

Electric vehicles, or EVs, are cars that use rechargeable batteries and electric motors rather than internal combustion engines (ICEs) for acceleration. They’ve been around for over 100 years, but research and development into battery technology has been modest for most of the 20th century. Lithium-ion battery technology became advanced enough to mass-produce electric cars in the late 1990s and 2000s, and sales have steadily increased since the Tesla Roadster was introduced in 2008. Electric vehicles are seen as a means of reducing carbon emissions since battery electric vehicles (BEVs) themselves produce zero emissions. Other vehicles called plug-in hybrid electric vehicles (PHEVs) use both electric power from the batteries and the ICE as backup.

EVs are growing from a small base, but grew from 9% of global new car sales in 2021 to 14% of the total in 2022. That was a 65% year-over-year growth rate, and the industry delivered 10.2 million EVs globally in 2022. Projections show that number will climb above 16 million by 2023. Across the world, market shares vary widely from country to country. Almost 88% of Norwegian new car sales in 2022 were electric cars. On the other hand, in the United States, where much of the modern EV innovation was created, less than 8% of new vehicle sales in 2022 were EVs. The world’s largest EV market, China, saw 30% of the market switch to EVs in a given year.

We know you mean Elon Musk, but he’s probably more like the father of the modern mass-market electric car. All the way back in 1827, a Hungarian priest named Anyos Jedlik invented the electric motor and the following year used it to power his type of vehicle. French scientist Gaston Planté invented the lead-acid battery in 1859, and German engineer Andreas Flocken built the first true electric car for the public in 1888. Around 1900, electric cars accounted for about 38% of all vehicles sold in the US. They began to lose market share rapidly after 1910, when gasoline-powered vehicles became much more affordable. They largely died out until new research programs in the 1990s led to gradual private sector investment in the 2000s.

China’s BYD is by far the largest EV manufacturer in the world. It sold 1.8 million EVs in 2022 and accounted for 20% of the global market in the second half of the year. The asterisk awarded to BYD is that the vast majority of these vehicles are hybrids. Tesla’s 12% market share is often considered more significant than BYD’s because it only sells BEVs and is the best-known EV brand in the world. The top five are completed by Volkswagen, BMW and Wuling. However, as a new sector with large investments, many startups have flooded the market. These include China’s Nio, Li Auto and Xpeng; a Swedish-Chinese manufacturer called Polestar; and Lucid and Rivian from the US.

Tesla stock forecast

Tesla shares surged 68% on Thursday with the usual 117 million shares changing hands, nearly eclipsing 200 million in the regular session. The only certainty is that TSLA stock will continue this downward trend. The only question is when and where the bottom will be found.

Tesla’s stock has fallen to a price level last seen in May, and normally bullish analysts like Morgan Stanley’s Adam Jonas said the lack of guidance specifics is likely to weigh on TSLA stock early in the year.

Both bears and bulls will focus on two historical support levels. These are $167.50 and $154. The $167.50 level supported bearish demand for TSLA stock in March and May 2023. $154 was the final bottom during this downtrend, which reached a low in April.

Of note, the weekly chart shows a 13-week simple moving average that has been below its 26-week counterpart since last October. That said, the weekly chart has been telegraphing weakness in TSLA’s price action for some time now. Now the distance between these moving averages will increase. It may take several weeks for consolidation to occur, although TSLA stock has already reached oversold conditions on the daily chart.

TSLA Weekly Stock Chart

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