Business & Investment

Tesla’s share price fell after disappointing earnings, but analysts dispelled margin concerns

Investors continued to sell Tesla shares on Thursday after disappointment in earnings, but Wall Street analysts had abandoned some of their biggest concerns, including weak margins.

Tesla stock
TSLA,
-2.79%

After selling on Wednesday following Tesla’s fourth-quarter results, it traded at a low of $ 801 and recently fell 2%.

opinion: Apple justifies its huge reputation, but Tesla … not so much

Tesla Reported adjusted profits in the fourth quarter of 80 cents Revenue will increase by 46% to $ 10.74 billion. However, Wall Street analysts wanted adjusted revenue of $ 1.02 and revenue of $ 10.47 billion. They were also looking for direct guidance on the 2021 sale they didn’t get.

Silicon Valley automakers plan to expand their production capacity “as soon as possible” and expect to reach an average annual growth rate of 50% over a “multi-year period” when it comes to delivery alternatives to sales. It was. Executives said Wednesday that further growth is expected in 2021.

Chris McNally of Evercore ISI said in a memo that the lack of a clear delivery outlook “would be a mixed bag.”

Bulls and bears will discuss the lack of a formal delivery outlook guide, he said, pointing out the implications that Tesla will reach 3.88 million units by 2025, bears compared to the previous wall Expectations of about 800,000 to 850,000 streets pointing out about 750,000 implicit 2021 guides.

Deutsche Bank analysts said Thursday’s note, “Based on the strong performance in the fourth quarter of 2008, we will take advantage of post-earning (Tesla) weaknesses to accumulate stocks before a great year for the company.” Stated.

Analysts led by Emmanuel Rosner emphasized Tesla’s self-driving software, “Accelerating Materials in Delivery, New Factories and Regions, New Products and Segments, and Large Upward Options from FSD.”

According to Citigroup analyst Itai Mikaeri, lower margins (net car sales after deducting costs) were another concern for investors. The gross profit margin of automobiles excluding credits was 20.7%, but the forecast one year ago was 24.2% and 20.9%.

“I don’t think the LT will change from quarter to quarter, [long-term] There is a lot of bullish / bearish debate, and a softening of gross profit in the fourth quarter (declining ASP-average vehicle selling price) can be seen as negative in the general bullish case of supply and demand. ” Micheali said. Among Tesla’s bears, Citi rates Tesla as selling / high risk at a target price of $ 159.

In addition to lower prices, Tesla CEO Elon Musk’s 2018 package-related $ 267 million stock-based compensation award and model S and X price cuts and changes, Ben said. Costs and price cuts for the Chinese Model 3 put pressure on margins. Caro, Senior Research Analyst at Baird.

Kallo encouraged me to calm down a bit in this regard. “Unfortunately, we believe these additional cost / price cuts are needed to promote long-term growth and temporary nature. Especially in China, price cuts are becoming more and more funded. We see it as a wise move to stop the growth of domestic start-ups. ”

Kallo has surpassed its rating by raising Tesla’s target price from $ 728 to $ 736 per share. Guidance from Musk said it was “more ambiguous, but especially long-term,” especially in 2021, but added that it maintained the 2021 forecast volume and raised it from 856,000 to 859,000.

Dan Ives, a Wedbush analyst who rates Tesla as neutral with a $ 950 price target, described the latest results of electric car makers as “strong”, despite investor concerns. He argued that the profits remained in the “healthy range”. .. Software upgrades and strong growth from China are driving Tesla’s growth story, he said in a note to clients.

Mikaeri of Citi also emphasized comments from Tesla’s management. This made a “confident” ruckus about the rate of improvement in fully autonomous driving technology (FSD) this year.

“We continue to believe in FSD / AV [autonomous vehicles] It will be a very important part of this year’s Tesla story, “he added, but they wanted to see” more evidence “of progress in that regard.

Tesla’s share price has risen more than 640% in the last 12 months, but the S & P 500
SPX,
+ 1.75%

It increased by 14%.

Tesla’s share price fell after disappointing earnings, but analysts dispelled margin concerns

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