Tesla’s disappointing delivery results show how hard it is getting to sell electric vehicles —and explain why shares had dropped more than 20% since peaking in December.
The stock, however, roared back on Friday, helped by a big price-target boost from a Wall Street analyst.
Tesla reported fourth-quarter deliveries on Thursday, posting a respectable 495,570 vehicles sold. The number was a quarterly record but still fell short of Wall Street estimates by some 10,000 units.
Investors weren’t pleased. The stock dropped 6.1% on Thursday and closed at $379.28, leaving it down 21% from a record close of $479.86 in December, meeting the 20% threshold for a bear market.
There were a few reasons investors expected more. For starters, there was Tesla’s goal. It projected more vehicles sold in 2024 than in 2023. That expectation implied about 515,000 vehicle deliveries for the fourth quarter. Tesla missed its mark by roughly 20,000 cars.
It wasn’t for lack of trying. TD Cowen analyst Jeff Osborne pointed out in a report Thursday that deliveries were light despite aggressive discounting. Tesla offered 0% annual percentage rate financing on some models in the U.S., down from 1.99% in the third quarter. “Tesla also announced a lease buyout option on Nov. 27” to further boost sales, added Osborne.
Tesla’s incentives didn’t drive as much volume growth as hoped for.
There was also no—or at least not enough—buying by those looking to get ahead of the potential loss of the federal EV purchase tax credit worth up to $7,500 for qualifying purchases. Wall Street believes President-elect Donald Trump will eliminate the Biden-era credit. Car buyers going electric would have had to purchase an EV in 2024 to ensure they captured the subsidy.
Chinese data also pointed to a big fourth quarter. Tesla was on pace to sell some 190,000 cars to Chinese buyers in the fourth quarter—a record for the country, and up more than 10% year over year. Strong Chinese sales, however, were offset by weaker sales in places such as Germany.
Things were set up for a great quarter. It turned out to be very good.
Even after Thursday’s dip, the stock was still up about 51% since the Nov. 5 election, adding some $410 billion to its market value.
Investors are focused more on 2025 right now. Tesla is expected to launch a lower-priced model, helping boost volume growth. The car, due out in early 2025, should start around $30,000 before any federal or state subsidies.
Then there is artificial intelligence. Tesla uses AI to train its autonomous driving software and plans to launch a self-driving robo-taxi service in late 2025. “The $1 trillion of AI valuation has started to get unlocked in the Tesla story and we believe the march to a $2 trillion valuation for Tesla over the next 12 to 18 months has now begun,” wrote Wedbush analyst Dan Ives in a Thursday report.
He rates Tesla shares Buy and has a price target of $515 for Tesla stock. Osborne rates Tesla shares Hold and has a target of $180.
The difference in price targets amounts to about $1.1 trillion in market value. Wall Street doesn’t exactly agree on how to value Tesla stock, or how 2025 will turn out for the EV maker.
Shares closed up 8.2% at $410.44 on Friday, more than wiping out the post-delivery decline. The S&P 500 and Dow Jones Industrial Average added 1.3% and 0.8%, respectively.
Coming into Friday, shares had fallen for five consecutive days. Helping snap the streak is a price-target boost from Canaccord analyst George Gianarkias. He raised his price target to $404 a share from $298 and maintained his Buy rating.
“Despite weaker-than-expected deliveries, we are sticking with our Buy,” wrote the analyst, citing the new products coming. “Tesla also has a generational set of growth opportunities ahead, including EVs, autonomy/AI, energy storage, and robotics.”
Since the election, the average analyst price target aggregated by FactSet has moved up about $65 a share to about $300 from $235.
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