FREMONT, CALIFORNIA – APRIL 20: In an aerial view, Tesla cars sit parked in a lot at the Tesla … [+]
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Tesla
There are many reasons to dump Tesla stock — the most important of which are its weak customer value proposition and CEO Elon Musk’s urge to focus more time on artificial intelligence and robotics.
After the stock doubled in 2023, investors should consider taking their profits. Investors who hold on to Tesla shares will suffer.
Tesla’s Weak Performance And Prospects
On Wednesday, Tesla provided investors a disappointing fourth quarter report and delivered weak guidance for 2024.
Here are the key figures:
- Q4 Revenue: $25.17 billion — up 3% from Q4 2023 and about $500 million short of LSEG expectations. A “reduced average selling price following steep price cuts around the world in the second half of the year” contributed to the meager revenue growth, according to CNBC.
- Q4 Operating Margin: 8.2% — roughly half the Q4 2023 figure, CNBC reported.
- Q4 Net Income: $7.9 billion — more than double the Q4 2023 amount with help from a $5.9 billion “one-time noncash tax benefit,” noted CNBC.
- 2024 Vehicle Volume Forecast: Electric vehicle volume growth in 2024 “may be notably lower” than the rate observed last year — Tesla “shipped 1.8 million cars in 2023,” CNBC wrote. The absence of a specific 2024 production target departs from previous years. In 2023, deliveries rose 38% — well short of the 50% target. Analysts predict a 20% increase in 2024, noted Bloomberg.
Musk had much to say in Tesla’s earnings conference call. Here are what I think of as his lame excuses:
- Weak growth. Musk said the company is “between two growth curves” — one that began with the global expansion of Model 3 and Y, and the next, “which will happen in the second half of 2025 following the launch of the next-generation vehicle platform,” noted Seeking Alpha.
- Low margin. Musk blamed interest rates for Tesla’s low margins. He said high interest rates make “lots of people who want to buy our car” unable to afford to pay the price. “If the interest rates come down quickly, I think margins will be good. And if they don’t come down quickly, they won’t be that good,” he said, according to Seeking Alpha.
- Cybertruck. CNBC reported Musk said Tesla can make 125,000 Cybertrucks per year — and would be able to make a quarter million per year at some undetermined point in the future. He said demand for the vehicle exceeds the company’s ability to produce them. He patted himself on the back for not “dramatically raising the price,” noted Seeking Alpha.
- Competition from China. Musk attributed Tesla’s ability to survive competition from Chinese competition to “trade barriers,” reported Seeking Alpha.
In what sounds like a Hail Mary pass, Musk touted the company’s push into robotics. He told investors, “I think we’ve got a good chance of shipping some number of Optimus units next year, but like I said, this is a brand new product. When there’s a lot of uncertainty in your uncharted territory, it’s obviously impossible to make a precise prediction,” noted Seeking Alpha.
To be sure, Musk faces competition. Rivals include Boston Dynamics, Agility Robotics and Figure. “Other robotics companies such as Sanctuary, Apptronik, 1X, Fourier and Unitree are all working on dexterous manipulation hardware, mimicking human hands,” CNBC reported.
Tesla’s Weak Customer Value Proposition
With gasoline prices having fallen substantially, relatively high EV prices, long charging times, and range anxiety are among the significant negatives EV makers must overcome.
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