Tesla's fourth-quarter delivery and production numbers were good, but Wall Street doesn't sit still. The focus has already moved on to 2024 profit margins and shipments.
The electric-vehicle company delivered a better-than-expected 485,000 cars and trucks in the final three months of the year. Tesla shares fell six cents to $248.42, but that was a tremendous result considering the Nasdaq Composite dropped 1.6%. Apple shares fell 3.6% following a downgrade from Barclays, and stock in Rivian Automotive stock plunged 10% to $21.10 after the company reported its own solid delivery figures.
In 2023, "Rivian fixed production, began its journey to scale in earnest, and started to beat/raise its guidance targets," wrote Canaccord analyst George Gianarikas in a Tuesday report. "It ended the year with a bang, exceeding its production target by about 3,000. Deliveries were also in line with consensus and higher than our estimates, leaving us mildly confused by [the] stock reaction."
Investors just weren't in the mood to buy shares to start the new year. A second headwind is that Rivian shares were up about 30% in the month coming into the delivery report.
Gianarikas rates Rivian stock at Buy and has a target of $30 for the price. He also rates Tesla shares at Buy, with a $267 price target.
He was impressed by Tesla's delivery performance too, noting that the company shipped more than 1.8 million vehicles in 2023, as it had told investors to expect, despite rising interest rates and a slowing economy.
Still, Gianarikas said he is "riddled with more questions than answers." At the top of the list is whether 2024 expectations for deliveries of about 2.2 million units are low enough. Then there is whether automotive gross margins have hit bottom at about 16% in the third quarter, down about 10 percentage points from a year earlier, as a result of Tesla's price cuts. And given that Tesla isn't expected to launch a new vehicle model in 2024, can investors get excited about Optimus the robot, and advancements in Tesla's driver assistance software?
"More important than today's delivery news is a crucial earnings call that awaits," he added. That call is slated for Jan. 24.
TD Cowen analyst Jeffrey Osborne believes Tesla needs to forecast deliveries of about 2.2 million vehicles on the January call to keep investors happy. He rates Tesla shares Hold and has a $200 price target for the stock.
New Street Research analyst Pierre Ferragu rates shares Buy and has a $300 price target. He wrote after the delivery report that gross profit margins should remain "under pressure" in the fourth quarter, but sees them improving to about 19% in 2024.
Overall, Wall Street is a bit less upbeat. It expects the fourth-quarter gross profit margin, excluding regulatory credits, to come in at about 16%, similar to the third quarter, and improve by about one or two percentage points in 2024.
The earnings conference call is the next big deal for the stock. Comments CEO Elon Musk makes about further price cuts and interest rates will go a long way to answering some of the lingering questions Wall Street has after a record quarter for shipments.
Tesla stock was down 4.01% on Wednesday, while the S&P 500 and Nasdaq Composite had both fallen over 0.8%.
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