Connect with us

News

Tesla (TSLA) Q4 and FY 2023 earnings call: How analysts are reacting

Credit: Tesla Asia/X

Published

on

Tesla (NASDAQ:TSLA) took a steep dive on the heels of the company’s Q4 and FY 2023 earnings call, dropping over 9% as of writing. With the company stating that volume growth would be tempered this year due to its focus on the next-generation platform and executives being quite vague about its guidance for 2024, analysts, including some TSLA bulls, are not happy. 

Tesla actually had a record 2023, with vehicle sales growing nearly 40% year-over-year in 2023 to over 1.8 million units worldwide. Wall Street currently expects Tesla to post about 2.1 to 2.2 million vehicle sales for 2024, which would translate to a growth of about 20%. This number seems conservative and attainable enough, but Tesla simply maintained that its volume growth would be substantially lower than 2023’s ~40%. 

Wedbush analyst Dan Ives shared his sentiments about Tesla’s earnings call, in a post on X. Ives described the call, which provided some high-level long-term views on the company, as another “train wreck” conference call. Following the earnings call, Ives adjusted his price target for Tesla from $350 to $315 per share, though he also noted that Wedbush remains bullish on the company.

“We were dead wrong expecting Musk and team to step up like adults in the room on the call and give a strategic and financial overview of the ongoing price cuts, margin structure, and fluctuating demand. Instead, we got a high-level Tesla long-term view with another train wreck conference call,” Ives noted. 

Advertisement

RBC analyst Tom Narayan also maintained his “Buy” rating on Tesla, though he lowered his price target from $300 to $297 per share. “We leave our delivery estimates unchanged after the vague guide, but lower our car gross margin expectations on less robust cost down opportunity,” he noted in a report. Narayan also pointed out that Tesla’s next-generation vehicle platform is still “many quarters away” from impacting the company’s numbers. 

Morgan Stanley’s Adam Jonas, for his part, pointed out that Tesla almost did not provide any guidance during the call. He also observed that there were no “AI rabbits” pulled out of Tesla’s hat during the call, which was highlighted by Musk’s conservative comments about Dojo. Despite this, Morgan Stanley opted to maintain its “Overweight” rating and $345 price target on Tesla, with a bear case PT of $100 and a bull case PT of $500 per share.  

While the sentiments surrounding Tesla’s Q4 and FY 2023 earnings call seem generally negative, some analysts opted to take a more optimistic stance on the company. Canaccord lowered its price target for Tesla from $267 to $234 per share, though the firm also noted that it is time for investors to be patient about the company. The firm noted that it remains bullish about Tesla’s long-term prospects. 

“It’s time to be patient. The next-generation vehicle, FSD upgrades, margin improvement, and Optimus will likely bring an acceleration in revenue growth. But not this year — 2024 will be subdued; probably a trough, but still relatively slow (we model ~18% y\y revenue growth). Growth curves are seldom smooth, and Tesla is no different. 

Advertisement

“We are still quite bullish on Tesla’s long-term growth prospects. We think EVs will replace ICE vehicles despite recent countervailing narratives. We see vehicle autonomy as one of the highest value-creating technologies to be deployed. Ever. And Tesla, with its razor/ razorblade approach, is a leader in this real-world AI. We think Tesla is Apple on steroids as it focuses on manufacturing and a higher level of vertical integration. Tesla is THE sustainability behemoth, in our opinion,” the firm noted. 

Longtime Tesla bull Gene Munster of Deepwater Asset Management also pointed out that Tesla’s auto gross margins for the past quarter ended a streak of dropping margins. “The critical metric, auto gross margins ex credits, came in at 17%, compared to the Street at 17.3%. I was expecting 16.7%. While this missed the Street, it marks the end of four consecutive quarters of margin decline, up from 16.3% in the Sep-23. Over, this is a positive,” Munster wrote on X. 

Don’t hesitate to contact us with news tips. Just send a message to simon@teslarati.com to give us a heads up.

Advertisement

Simon is an experienced automotive reporter with a passion for electric cars and clean energy. Fascinated by the world envisioned by Elon Musk, he hopes to make it to Mars (at least as a tourist) someday. For stories or tips--or even to just say a simple hello--send a message to his email, simon@teslarati.com or his handle on X, @ResidentSponge.

Advertisement
Comments

News

Starlink gets its latest airline adoptee for stable and reliable internet access

The company said it plans to “rapidly integrate Starlink into its fleet,” and that the first Starlink-equipped aircraft will enter service this Summer.

Published

on

Credit: Southwest Airlines

SpaceX’s Starlink, the satellite internet program launched by Elon Musk’s company, has gotten its latest airline adoptee, offering stable and reliable internet to passengers.

Southwest Airlines announced on Wednesday that it would enable Starlink on its aircraft, a new strategy that will expand to more than 300 planes by the end of the year.

The company said it plans to “rapidly integrate Starlink into its fleet,” and that the first Starlink-equipped aircraft will enter service this Summer.

Tony Roach, Executive Vice President, Chief Customer and Brand Officer for the airline, said:

“Free WiFi has been a huge hit with our Rapid Rewards Members, and we know our Customers expect seamless connectivity across all their devices when they travel. Starlink delivers that at-home experience in the air, giving Customers the ability to stream their favorite shows from any platform, watch live sports, download music, play games, work, and connect with loved ones from takeoff to landing.”

Southwest also said that this is just one of the latest upgrades it is making to provide a more well-rounded experience to its aircraft. In addition to Starlink, it is updating cabin designs, offering more legroom, and installing in-seat power to all passengers.

Southwest became one of several airlines to cross over to Starlink, as reviews for the internet provider have raved about reliability and speed. Over the past year, Hawaiian Airlines, United Airlines, Alaska Airlines, airBaltic, Air France, JSX, Emirates, British Airways, and others have all decided to install Starlink on their planes.

This has been a major move away from unpredictable and commonly unreliable WiFi offerings on planes. Starlink has been more reliable and has provided more stable connections for those using their travel time for leisure or business.

Jason Fritch, VP of Starlink Enterprise Sales at SpaceX, said:

“We’re thrilled to deliver a connectivity experience to Southwest Airlines and its Customers that really is similar, if not better, than what you can experience in your own home. Starlink is the future of connected travel, making every journey faster, smoother, and infinitely more enjoyable.”

Starlink recently crossed a massive milestone of over 10 million subscribers.

Continue Reading

Elon Musk

Tesla nears closure of Full Self-Driving purchasing option

The move to bring FSD to this type of purchasing program comes after CEO Elon Musk noted in January that Tesla would move away from the outright purchase option.

Published

on

Credit: Tesla

Tesla is nearing the closure of its Full Self-Driving outright purchasing option, which will be removed on February 14, meaning Saturday will be the last time it can be bought as a non-subscription.

Tesla is aiming to move its Full Self-Driving suite to a subscription-only platform, a move that will enable people to only pay monthly for the semi-autonomous driving functionality.

The move to bring FSD to this type of purchasing program comes after CEO Elon Musk noted in January that Tesla would move away from the outright purchase option.

It is currently priced at $8,000 for the outright option to use Full Self-Driving, a substantial decrease compared to the $15,000 it was priced at one time. For the monthly subscription, it is just $99 per month, but that price will change, likely increasing as things get more advanced.

Tesla is overhauling its Full Self-Driving subscription for easier access

We say it will likely increase because there is no indication of how Tesla will price FSD. There has been some speculation that Tesla could utilize a tiered system to price FSD, which would potentially allow owners to pick and choose a set of features that would be most ideal for them.

This would potentially introduce an even more affordable option for FSD use, but this is unconfirmed. The reason many say this could be an option for Tesla is the fact that if the price goes up further, the take rate, which is currently around 12 percent at its most recent estimate, could be lower.

Musk needs 10 million active Full Self-Driving subscriptions to unlock one of the tranches of his newest compensation package.

The move to a subscription-only platform has its positives and negatives, and owners have been more than vocal about these since Musk confirmed the move.

Positives

  • Lower barrier to entry and higher potential adoption
  • Financially better for many users
  • Easier transfers and brand loyalty
  • Predictable recurring revenue for Tesla
  • Access to the latest features

Negatives

  • Higher long-term cost for loyal/long-term owners
  • No true “ownership” or permanence
  • Risk of future price hikes or even deactivation
  • Perceived as of less value
  • Impact on resale and used market

Overall, there is a split among the Tesla community in terms of what they see as the “right” way to handle this. Tesla is likely to shed more details on what its plans for the subscription-only platform will be, including pricing, in the coming weeks.

Continue Reading

Elon Musk

Elon Musk’s Boring Company selected for Universal Orlando tunnel project

The underground transport tunnel is designed to address the persistent gridlock surrounding International Drive. 

Published

on

Credit: The Boring Company/X

Elon Musk’s The Boring Company has been selected for a proposed underground transit system connecting Universal Orlando Resort and the newly opened Universal Epic Universe. 

The underground transport tunnel is designed to address the persistent gridlock surrounding International Drive. 

As noted in a blooloop report, Universal’s Shingle Creek Transit and Utility Community Development District approved a resolution showing its intent to designate The Boring Company as the contractor for the project. 

The agreement covers the full scope of the project, from the tunnel’s design, construction, and maintenance. The project has also been described in public documents as a “point-to-point innovative transportation” initiative with a 25-year agreement.

Advertisement

The proposed Boring Company tunnels would directly link Universal’s existing parks with Epic Universe, which sits roughly three miles away from Universal Orlando Resort. Today, buses are the only direct connection between the two destinations.

Project requirements were quite stringent. Bidders were required to demonstrate at least $75 million in bonding capacity, have a minimum of seven years of operational experience, and show prior delivery of a comparable project valued at $25 million or more within the past 15 years. The Boring Company, thanks in no small part to the Vegas Loop, meets these requirements.

The Orlando selection adds to The Boring Company’s growing portfolio of Loop-style systems. In Las Vegas, the Las Vegas Convention Center Loop has transported more than two million passengers in Tesla vehicles through underground tunnels since 2021. The greater Vegas Loop system is also under construction.

For now, residents in the area seem enthusiastic about the upcoming project. In a comment to Fox35, residents noted that the tunnels could improve traffic in the area. 

Advertisement

“We are very congested at certain times and certain hours and that would certainly help with people not having to budget their time,” Mary Walters-Clark, a resident, stated. Another resident, Scott Heinz, echoed similar sentiments. “I think it would be a new opportunity to lessen traffic load and good for visitors as well,” he said.

The tunneling startup has started bringing its Loop projects to international locations. It recently signed a memorandum of understanding with Dubai’s Roads and Transport Authority to explore the development of a 17-kilometer underground Loop network beneath Dubai.

Advertisement
Continue Reading