To The Moon

• Tesla $Tesla Motors(TSLA)$ rose 1.8% on Wednesday but surged 13% in after-hours trading as CEO Elon Musk pledged to accelerate plans for a more affordable EV.

• Tesla's Wednesday closing price of USD144.61 is still 64.5% lower than its all-time high.

1Q2024 Earnings Review:

• Revenue declined 9% year-over-year to USD 21.3 billion, falling short of the LSEG estimate of USD 22.15 billion. This marks the first year-over-year revenue drop since the second quarter of 2020.

• Earnings per share (EPS) declined 47% year-over-year to 45 cents, missing the LSEG estimate of 51 cents.

• Automotive Gross Margin stood at 16.4% in the first quarter, lower than the expected 17.6%.

• Operating margin was disappointing at 5.5%, below the anticipated 7%.

• Tesla cautioned that the vehicle volume growth rate may be notably lower than the growth rate achieved in 2023.

Source: Tesla

Autonomous Driving:

• Musk said, "If someone does not believe that Tesla can solve autonomy, I don't think they should be an investor in the company."

• I think Tesla’s master plan is to roll out a cheaper Tesla model to make Tesla cars accessible to more people and later sell the autonomous Full Self-Driving (FSD) package to these Tesla car owners to improve the profit margin.

• Thus, if investors do not believe that Tesla could solve autonomy, Tesla loses the biggest investment thesis, as Tesla would be just a regular car maker that enjoys the same low profit margin as traditional ICE car makers.

Robotaxi: Tesla plans to operate some cars for its fleet while also enabling owners to deploy their vehicles for service, akin to a blend of Airbnb and Uber.

New Models:

• Tesla anticipates expediting the launch of new models, including "more affordable models" as early as 2025, earlier than the late 2025 timeframe announced in January.

• However, these new models will utilize Tesla's existing manufacturing lines and incorporate "aspects" of its current platform and a next-generation platform, potentially resulting in less cost reduction than previously anticipated.

India Factory: Elon Musk postponed his meeting with Indian Prime Minister Narendra Modi to later this year.

Cybertruck: In April, over 1000 Cybertrucks were produced in a single week. Musk aims to scale production to 5,000 units per week by 2025. Wall Street had anticipated 40,000 Cybertruck deliveries in 2024.

Optimus: Musk anticipates Tesla could commence sales of the Optimus by the end of 2025.

Conclusion:

• Tesla missed most of the earnings estimates but Tesla portrait a better EV future and hence share price rose in the after market trading.

• Even though new models, including the low-cost vehicles, will launch sooner than expected, they may not substantially raise the operating profit margin yet as Tesla is using existing manufacturing lines.

• Despite promising updates from Robotaxi, the next-generation platform, and Optimus, they mostly help bump up revenue in 2025; Tesla seems to lack any plans to bolster its earnings in 2024.

• Thus, we expect a continued disappointing share price performance in 2024 after investors have priced in Tesla’s “promises.”

• Tesla may have a better fourth-quarter 2024 share price performance, as investors may want to position themselves more in Tesla to prepare for earnings surprises in 2025 due to the launch of the next-generation platform and Optimus.

• However, Tesla’s share price is more news-driven, and hence we are prepared for any surprising share price movement.

• I previously mentioned that Tesla’s meaningful support levels were USD143 and USD106 in my webinar. Tesla may have reached an interim bottom when it closed at the 2024 low of USD142 on Monday.

• I remain long-term constructive on Tesla but believe that long-term bulls should exercise patience while investing in Tesla this year.