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Tesla Inc. shares on Thursday traded at their lowest since October, as investors looked past solid quarterly results to worry anew about the electric-vehicle maker’s timelines, promises, and constraints on production.
Tesla stock
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traded as low as $857.90, down more than 7%, and on track for its lowest close since Oct. 20, when it closed at $865.80. It is also on track for the largest one-day percentage decline since Nov. 9.
Share price losses dragged the company’s market capitalization to about $850 million. The last time Tesla’s market cap was above $1 trillion at the close was Jan. 14.
Tesla late Wednesday reported fourth-quarter earnings well above Wall Street consensus, but shares traded down immediately after the release as the company revealed that its factories have run below capacity for months due to supply-chain problems.
The stock reversed course, however, as Chief Executive Elon Musk sought to assuage those production concerns, saying that he sees production growth “comfortably” above 50% in 2022.
He kept light on near-term issues, however, and spent a good portion of the hour-plus conference call speaking about driverless Teslas, which he promised by the end of this year, a potential fleet of robotaxis, and the Tesla humanoid robot unveiled in August.
Some 12 hours after the results, some analysts bore down on the lack of specifics.
The results threw a few “curveballs” at Tesla bulls, Jeffrey Osborne at Cowen said in a note Thursday. Musk’s “‘rant’ on (Full Self Driving) brings back flashbacks to ’19 when 1mn robotaxis were promised by YE20,” he said.
Tesla shares “tend to work the best when something new is coming,” Osborne said. Meaningful production of its new vehicles, such as the Cybertruck and the commercial electric truck, are pushed to 2023 and there’s no “Model 2,” a cheaper EV around $25,000, in development, he said.
Investors had high expectations that Tesla would discuss its product road map over the next year plus, analyst John Murphy with B. of A. Securities said in his note. Instead, the outlook for 2022 and beyond “was relatively vague.”
Tesla’s production growth guidance was “encouraging,” but somewhat puzzling as Tesla continued to emphasize that supply-chain challenges remained a constraint, Murphy said.
“Additionally, we anticipated that, within its 2022 outlook, (Tesla) might provide more detail around the start of production and expected ramp timeline in its Austin and Berlin facilities, but little definitive guidance was provided other than the current status in both plants, which was disappointing.”
Others took a more optimistic view. Tesla’s “long-term story is intact,” said Adam Jonas with Morgan Stanley. Tesla is on a path to be a 10-factory company producing as many as 1 million vehicles per factory by 2030, he said.
Ben Kallo at Baird said the call reinforced Tesla’s focus on scale as it ramps capacity at its five factories.
Musk highlighted “several technology advancements,” he said. “Although these have previously been discussed, the commentary seemed to indicate some were closer to commercialization than before. We remain buyers.”
While Tesla reiterated “optimism” on its Full Self Driving driverless system, analyst Mark Delaney at Goldman Sachs said he and colleagues remain “guarded on
how quickly the company can achieve full autonomy given the delays the industry
broadly (including Tesla) has encountered historically on (autonomous vehicles).”
The lack of progress on a $25,000 EV could raise questions about Tesla’s growth past the next year, as other EVs around that price come to market, Delaney said. For now, however, he said Tesla can count on “significant growth ahead with its current models.”
Tesla’s results were “strong, but not a blowout,” Toni Sacconaghi with Bernstein said in his note. “Elon Musk’s highly anticipated product update was a bit of a letdown,” he said.
And despite Tesla executives’ highlighting FSD, full self-driving “has, and will likely continue to take longer to deliver than Tesla believes, due to technical and legal reasons,” Sacconaghi said.
Tesla shares have underperformed the broader index in the past 12 months, with the stock up 1.2% compared with gains of around 17% for the S&P 500 index.
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