Tesla headed for new year-to-date lows Tuesday as Chief Executive Elon Musk focuses on autonomy as the next "phase of growth" for the company. But without details, investors and analysts seem skittish of the strategy ahead of the upcoming earning call.
Tesla and Musk have telegraphed that 2024 will be a difficult for business throughout the year, starting with the company's fourth-quarter earnings call in late January. On Monday, news broke that Tesla cut its global workforce by more than 10% as EV demand slows and competition ramps up.
However, another report compounded the news of layoffs, confirming Tesla had postponed its $25,000 next-generation vehicle to focus efforts on autonomy and its robotaxi program.
Wedbush Securities analyst Dan Ives, a longtime Tesla bull, called it a "dark day" for Tesla. Ives added that Tesla must provide answers to Wall Street next week on the company's earnings call.
"The string of bad news over the last few months has been a horror show for investors," Ives wrote Monday.
"We need to hear the rationale for the cost cutting, the strategy going forward, product road map, and an overall vision from Musk otherwise many investors might head for the elevators during this Category 5 perfect storm of weak demand Tesla is seeing globally in 2024," he added.
JPMorgan analyst Ryan Brinkman on Tuesday wrote that Tesla's largest ever layoffs should "firmly dispel the notion" that the company's Q1 delivery miss was supply-driven rather than reflective of a demand problem.
Brinkman added that the workforce cuts have "far reaching implications for the hypergrowth narrative still embedded in Tesla's share price, suggesting material downside risk for the stock."
Tesla stock fell 2.7% to 157.11 during market action Tuesday, hitting a 2024 low of 153.75 intraday. The move undercut its March 14 low of 160.51. On Monday, Tesla stock sank 5.6% to 161.48.
Bracing For More Bad News
Tesla reports first-quarter earnings and revenue next Tuesday and Wall Street is braced for more bad news.
Analysts project Q1 earnings will fall 38% to 52 cents per share with sales declining around 2% to $22.80 billion. If Tesla Q1 EPS comes in as expected, it would be the lowest quarterly level since the EV giant hit 48 cents per share in Q2 2021.
Tesla reported in early April that global first-quarter deliveries totaled 386,810 while it produced 433,371 vehicles. The deliveries included a combined 369,783 Model 3 and Model Y units along with 17,027 "other" vehicles. Tesla's deliveries of 386,810 in Q1 undercut even the lowest estimates and marks the lowest quarterly deliveries since 344,000 in Q2 2022.
The EV giant blamed the first-quarter performance on issues with the production ramp up of the updated Model 3 along with factory shutdowns.
Tesla Stock: Elon Musk Bets On Autonomy
Musk and Tesla have long teased both its cheaper next-generation vehicle and its robotaxi ambitions.
Throughout 2023, Tesla said it continued to "make progress" on its next-generation platform. However, the EV company remained mostly silent on details about the vehicle. Now, evidence is mounting that Musk is going all in on autonomy as EV demand slows.
Reuters reported on April 5 that Tesla canceled its long promised next-generation $25,000 vehicle, choosing to focus on developing its self-driving robotaxi platform. However, Elon Musk and others at Tesla challenged the veracity of the report. Musk also quickly announced Tesla will unveil the robotaxi on Aug. 8.
However, on Monday Electrek mostly confirmed the Reuters story, reporting that Tesla has put its next-generation vehicle on the "back burner."
The next-generation program expansion at Gigafactory Texas, internally called NV9, was a top priority for 2024 as of December 2023, according to Electrek. However, the NV9 expansion plan was recently defunded with Elon Musk instead focusing work on a data center for the robotaxi project at the Texas plant, Electrek reports.
Full Self-Driving And Robotaxi
Meanwhile, Tesla late Friday cut the price of Supervised Full Self-Driving (FSD) to $99 a month from $199. The EV company is also offering a one-month free trial of FSD for April in the U.S. for new purchases or existing EVs that are FSD capable.
Musk wrote in the leaked internal email outlining the layoffs Monday that Tesla is preparing for the "next phase of growth."
"We are developing some of the most revolutionary technologies in auto, energy and artificial intelligence," Musk wrote in the memo.
On April 9, Morgan Stanley analyst Adam Jonas, a longtime Tesla bull, wrote that canceling or delaying the Model 2, could be a "recognition that making and selling EVs in a traditional consumer model may not create lasting economic value."
Jonas added that while the firm is prepared for Tesla to unveil a robotaxi-prototype in August, it is cautious on "potential commercialization timelines for a fully autonomous taxi service."
Canaccord Genuity analyst George Gianarikas also recently wrote that "Tesla is increasingly a bet on autonomy."
Tesla Stock Performance
TSLA stock gained 3.7% to 171.05 last week, buoyed by Elon Musk's promise of a robotaxi unveiling on Aug. 8.
TSLA shares are trading below the 50-day moving average after falling around 13% in March.
Tesla Stock Has Plunged In 2024, But At Least It's Cheaper, Right? Nope
Wall Street consensus has 2024 Tesla earnings firmly below 2023's level. That signals another year of earnings declines for this growth stock. Wall Street currently expects Tesla earnings per share of just $2.70 in 2024, according to FactSet. That would be more than a 13% decline vs. last year's $3.12.
Wall Street's 2024 EPS consensus estimates for Tesla have now come down 29% since the end of 2023.
Looking further out, Wall Street consensus has Tesla's EPS in 2025 coming in at $3.70, down from the $5.29 projection at the end of 2023, according to FactSet.
The EV giant ranks eighth in the 35-member IBD Auto Manufacturers industry group. The stock has a 34 Composite Rating out of a best-possible 99. Tesla stock also has an 11 Relative Strength Rating and a 67 EPS Rating.
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