Tesla deliveries in the fourth quarter exceeded Wall Street predictions, as the global EV giant sold a record-setting number of vehicles and hit full-year expectations. However, reaction among analysts has been muted as Wall Street appears be squarely focused on end-of-year earnings and potential profit struggles in 2024. TSLA dropped Wednesday.
Elon Musk's Tesla reported Tuesday that it delivered 484,507 vehicles during the fourth quarter and 1.81 million in 2023, exceeding its 1.8 million target. In the aftermath on Tuesday and early Wednesday, firms maintained price targets and ratings on TSLA.
Citi analyst Itay Michaeli wrote Tuesday that Tesla's Q4 delivery total is viewed favorably but that it is going against generally negative sentiment around demand for EVs in 2024. Michaeli added that investor focus is shifting to Q4 auto gross margins and vehicle pricing. The Citi analyst kept a neutral rating and a 255 price target on Tesla stock.
Meanwhile, Bernstein analyst Toni Sacconaghi wrote Tuesday that auto gross profit margins, excluding regulatory credits, "are a key question" closing out 2023. Sacconaghi models 15.7% for the fourth quarter but that they could drop lower given the impact of price cuts in September and October as well as significant discounting of inventory models in Q4.
Tesla's EV Business Faces 'Challenges' In 2024. That Might Not Stop TSLA Stock.
Sacconaghi, who maintains an underperform rating and a 150 price target on Tesla stock, expects Tesla will see lower margins and disappoint on volumes in 2024.
To maintain sales momentum in 2023, Tesla aggressively cut vehicle prices and offered discounts throughout the year. Auto gross margins, which peaked at 30% in Q4 2021 amid industry chip shortages, have plunged well below 20%.
Tesla stock fell 4% to 238.45 Wednesday during market action, moving below the 21-day moving average. On Tuesday. TSLA lost 6 cents to 248.42.
EV Competition?
While Tesla hit record deliveries in 2023, China rival BYD surpassed Tesla in battery electric vehicles for the first time, with BEV sales of 526,409 in Q4.
In the U.S., Rivian Automotive topped its own 2023 vehicle production forecast, but the electric-vehicle maker fell slightly short of Wall Street predictions for Q4 deliveries.
The Irvine, Calif.-based company said Tuesday it produced 17,541 units and delivered 13,972 vehicles in the fourth quarter. Analysts had predicted fourth-quarter vehicle deliveries growing 75% to 14,000. For the full year, Rivian produced 57,232 vehicles and delivered 50,122. RIVN shares plummeted 10% Tuesday.
"Outside of China, we struggle to see anyone who can compete with Tesla at this stage," Morgan Stanley analyst Adam Jonas wrote Wednesday.
"We don't think it's a coincidence at all that Tesla's 'stepped up' engagement with foreign countries comes at a time when China has surpassed Japan as the largest exporter of passenger cars," Jonas added.
On Wednesday, BYD stock gained 1.5% while Rivian stock fell 3.7%.
Meanwhile, Tesla Chief Executive Elon Musk maintains TSLA is not a automotive company.
"Tesla is an AI/robotics company that appears to many to be a car company," Musk posted on X, formerly Twitter, early Wednesday.
Morgan Stanley's Jonas has a $380 price target on Tesla, with the EV business only accounting for $86 of that.
Tesla Stock Performance
The relative strength line for TSLA is off short-term lows in October but still in a downtrend since July. Tesla stock sank after the EV giant reported worse-than-expected Q3 earnings and revenue on Oct. 18.
However, Tesla stock is building the right side of a double-bottom base giving it a 278.98 buy point, according to MarketSmith analysis.
Tesla stock does have a 265.13 entry from a weekly handle, but a bit more depth would be ideal. That handle could be proper on a daily chart after Thursday.
In 2023, Tesla stock doubled, easily outperforming the broader S&P 500 index. Tesla stock ranks fifth in the 35 member IBD Auto Manufacturers industry group. The S&P 500 component has a 79 Composite Rating out of a best-possible 99. Tesla stock also has an 89 Relative Strength Rating and an 88 EPS Rating.
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