Tesla’s Market Value Dips by $73 Billion as Shares Plummet Following Disappointing Earnings Call

By Maggie On Jan 25, 2024

Tesla suffered a major setback on Thursday, with its shares falling as much as 11 percent after the market opened, costing the company $73 billion in market value. The decline comes after the electric car company reported on the slow pace of the EV market and the serious threat from Chinese competitors.

In an earnings call on Wednesday, car company Tesla, the world’s most valuable company, confirmed that sales growth this year will appear lower than before. While deliveries rose 38% last year from 2022, Tesla still fell short of last year’s 50% annual growth target, as the accolades grew. The company said the decline was due to continued development of its “Next” car, which could be a cheaper model.

Last quarter’s financial results compounded Tesla’s difficulties; Adjusted earnings per share fell 40% from the previous year. Although the turnover exceeded $25 billion, it did not meet the expectations of the business. This is the second quarter in which the company has missed analysts’ revenue estimates, contrary to its trend of better-than-expected profits since the start of 2021.

Despite its share price doubling in 2023, mostly in the first half of the year, Tesla is off to a weak start in 2024, with shares falling 16% ahead of Wednesday’s earnings release. The stock is so far trading at its lowest level since April of last year.

Thursday’s intraday declines targeted an 11.4% one-day decline in December 2022 amid concerns about Tesla’s sales and profits, as well as the overall health of the American economy and troubled investors.

Tesla’s earnings are also trending upward, with earnings falling by almost half to 8.2% compared to the same period in 2022. Production of Cybertruck trucks, which will start in 2023, has incurred losses.

Analysts, including Wedbush’s Dan Ives, have criticized Tesla for a lack of originality in its products. Reducing profits and strategic planning. Ives said the earnings provide “at least one response” to investors’ concerns about ongoing cost cuts, revenue models and changing needs.

Tesla has been trying to increase sales by lowering prices for over a year, but is facing increasing opposition. Competition from Chinese rivals. China’s BYD surpassed Tesla in the final quarter of last year, outperforming Musk’s company for the first time. Musk acknowledged that Chinese automakers are the most competitive in the world, and their ability to succeed outside of China also has implications for other global auto companies.

Increasing competition from BYD and other Chinese automakers has prompted Europe to launch an antitrust investigation that officials say could cause prices for trucks from China to rise.

Despite disappointing earnings, some analysts are optimistic about Tesla’s future. CFRA Researcher Garrett Nelson believes Tesla announcing low-cost vehicles in the next few years could have a negative impact on the stock. Similarly, Ben Barringer, an analyst at Quilter Cheviot, also spoke about the prospect, saying that the possibility of interest rates falling is a good thing for Tesla and the auto industry in general, offering customers the best financing options in the industry.