Investors ready for Tesla update as Musk eyes bigger stake
Elon Musk’s Tesla is gearing up to release its fourth quarter results on Wednesday as Musk is vying for a larger stake in the electric vehicle manufacturer.
Analysts have forecast $0.72 earnings per share and $25.52bn in revenue for the upcoming quarter. But Tesla has fallen short of revenue forecasts in four out of the last five quarters.
Tesla is currently slashing prices in order to bolster its sales volumes. Last quarter, China’s BYD dethroned Tesla as the world’s largest electric vehicle maker.
This, along with factory closures, hit its bottom line in the company’s most recent earnings, missing both revenue and profit expectations.
Ahead of its financial results, Tesla reported producing nearly 495,000 vehicles and delivering over 484,500 of them in its fourth quarter, achieving its annual delivery target of 1.8m vehicles.
This has given Tesla some “breathing space” amid increasing market competition, said Dan Coatsworth, investment analyst at AJ Bell.
But he warned that Tesla’s avant-garde Cybertruck is unlikely to be turning a profit any time soon.
“While Tesla’s Cybertruck is finally in the hands of a select few customers, the journey to launch has been fraught with delays and the vehicle could still be a headache for the company for months or years to come,” he said.
Musk recently warned it could take at least 18 months before production of the Cybertruck is at full capacity.
Meanwhile, the billionaire businessman is trying to increase his 13 per cent stake in the company.
He has expressed unease about the company’s vulnerability to potential takeovers by “dubious interests” and he is concerned about Tesla’s foray into artificial intelligence (AI).
“I am uncomfortable growing Tesla to be a leader in AI and robotics without having 25 per cent voting control,” Musk wrote in a post on X last week.
He liquidated a large portion of his shares two years ago to fund the acquisition of the social media platform.
Kathleen Brooks, research director at online broker XTB, said Tesla needs to deliver “stellar results” to justify its current price to earnings (P/E) ratio of 66.
Tesla surpasses the average P/E ratio for the S&P 500 of 19.8. Higher than this could signal that the stock is overvalued.
In 2023, the mega-cap tech stock gained 102 per cent on the Nasdaq. It had a more successful year than Apple’s 48 per cent rise but didn’t match Nvidia’s 239 per cent gains.
Tesla has styled self-driving and automated features as key to the future of its car models.