TSLA: Earnings plunged & Blind Faith remains!
Which is the Evil twin and Good twin?
Q1 2024 Results.
Tesla finally released its Q1 2024 earnings and it was not a pretty sight.
Actuals vs Wall Street expectations: (analysts surveyed by LSEG):
Tesla Q1 2024 Revenue
Revenue: $21.30 billion vs. $22.15 billion expected. (see above)
Earnings per share: $0.45 (adjusted) vs. $0.51 expected.
Operating profit margins: 5.5% vs. 6.6% expected
Other Key Metrics and YoY comparison.
A high-level comparison of other key earnings metrics shows the extent of the “bad” results. (see below)
Revenue declined from $23.33 billion (YoY) and from $25.17 billion in Q4 2023.
Net income dropped -55% from $2.51 billion to $1.13 billion YoY.
EPS dropped -53.42% from $0.73 cents a share to $0.34 a share YoY.
Free Cash Flow.
Tesla’s free cash flow was omitted in most reportings. (see above)
Free cash flow (FCF) has fallen from $0.44 billion to -$2.53 billion YoY.
It means Tesla has no excess cash on hand for Q1 2024 and dipped into past savings, clearly a sign of poor financial health.
It is also clear why the 10% mass layoff of workforce worldwide, with reports saying its actually closed to 20%.
World Wide EV Delivery.
In Q1 2024, Tesla reported 386,810 global deliveries, well below estimates of 449,080.
In terms of production output, it has produced 433,371 EVs, also below estimates of 452,976.
The difference of around -46,500 EVs produced versus sold led to concerns of demand waning globally for Tesla vehicles, which in turn has led to round after round of price cuts, in Germany & China - this time round.
Surprised Turn of Event!
Owing to overall market’s positive sentiments Tesla managed to closed up marginally higher +1.85% to end the day at $144.68 per share. (see below)
Shortly after earnings results were released; it was followed by the usual press conference.
It was during the meeting with the CEO that things seemed to have turned around.
Was it real or just another smoke screen? Come decide for yourself.
All That Was Mentioned.
(1) Low Cost EVs.
The long-awaited sub-$30,000 mainstream EV Model 2 is coming sooner than expected. While a launch date is not known, the company said the timeline is "as fast as possible."
(2) Autonomous Driving.
Amongst the many things said by the CEO, he revealed that Tesla is in talks with “one major automaker” to license Tesla’s driver assistance system, which is marketed in the US as the Full Self-Driving (FSD) option.
(3) Robots by 2025-end.
He also used the press conference to share his vision of his pet robotics project - Optimus.
Again, touting that it should be available by end 2025.
I would not put too much faith in this. Afterall its all hearsay no? It’s a case of he says and he says.. Ha ha ha.
My Viewpoints: (mine & mine only)
Budget EV.
Main reason why Tesla “recovered” on Wed, 24 Apr 2024 was because investors’ concerns on a low-costs EV have been confirmed by the CEO cum salesman.
Whether the budget EV project has been resuscitated or is in the pipeline all along, nobody will know and nobody will care (about the past).
What is important, it is on record a “go”, despite its debut will be later than Chinese EV makers.
If all goes according to plan, NIO’s budget EV Onvo will hit the market in May 2024.
NIO’s other line Firefly that is even more budgeted is slated for early 2025 release.
Will NIO’s early bird catches the worm and thwart’s Tesla’s Model 2 domination in China?
It’s going to play out very soon.
Regardless, Model 2 should be a “hit” in the US, due to no competition from Chinese EV makers on US grounds.
According to Cox Automotive, although Tesla’s still have a 51% share of the US EV market, its actually down from the 65% advantage, measured backed in 2022.
As more automakers beef up their EV lineups with viable alternatives, EV competition is heating up to an all new level.
Full Self Driving.
Was Mr CEO joking when he divulged that allegedly “a major automaker” is interested in Tesla’s FSD.
At Level 2 readiness, it is far from ready as an off the shelf product.
Tesla will achieve autonomous driving eventually; just not in the immediate future.
He needs to dial down his cry wolf stance.
Robot - Optimus.
Until it is proven as a working model in the real world, it’s just another hear say from this legendary storyteller; where “next year” is forever rolling along. Ha, ha, ha.
Important Note:
During the press conference, Mr musk reiterated the pessimistic outlook for 2024, telling investors that “volume growth rate may be notably lower than the growth rate achieved in 2023.”
It is hoped that Wall Street and his fan-base heard this “loud” and “clear” because he may be clearly signaling that earnings decline is still on the card for Tesla’s remaining 3 quarters.
There’s only a maximum 5.5% operating margin left for Mr musk to maneuver before it becomes a disincentive to produce an EV at a lost, with all the price slashing that he has unleashed.
Is Tesla slowly morphing into a high end “meme” stock? Looks like it from this angle.
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When can TSLA back to 200 again
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