To The Moon

$Tesla Motors(TSLA)$

Tesla's stock is down 6% at the time of this article creation due to missing Q4 delivery estimates. However, while deliveries fell short, Tesla's energy deployment exceeded expectations, a positive development likely to have a greater impact on Q4 earnings than the delivery miss. This video will explore the implications of these results.

Am I surprised by the delivery miss? Not at all. My previous predictions in a Tesla analysis were accurate. I couldn't justify estimates of 56,000 or even 54,000 vehicle deliveries for Q4 based on the available data. Though some people think Tesla is still the number 1 Hot cake in the automobile market, I believed they were unrealistic, and the outcome supports this. It's essential to stay grounded, especially after a significant stock rally of about 55% over the past year.

Recently, Tesla's stock has declined by around 18%, prompting several analysts to issue upgrades. It will be interesting to see if these analysts adjust their positions before or after earnings are released. In this video, we’ll delve into the positive and negative aspects of Tesla's production and delivery figures.

Q4 Earning:

• Vehicles Produced: ~459,000

• Vehicles Delivered: ~495,000

• Energy Deployed: 11 GWh

Tesla delivered approximately 36,000 more vehicles than it produced, a sign of rapidly declining inventories, potentially due to upcoming launches like the Model Y refresh and more affordable models. This production-delivery dynamic impacts cash flow positively: deliveries generate cash inflow, while production entails cash outflow.

From a regional perspective, my estimates were close but varied slightly. For example:

• U.S. deliveries: Estimated 160,000 vs. actual ~163,192

• EU deliveries: Estimated 86,000 vs. actual ~84,000

• Canada: Slight underestimation due to regional misclassification.

The overall delivery miss amounts to 19,000 vehicles compared to guidance. This translates into an estimated revenue shortfall of $470 million, based on the average selling price (ASP) of vehicles last quarter. While this is significant, the stronger energy deployment results—with higher margins (~30%)—could offset the delivery miss’s impact on profitability.

Stock Decline Factors:

Perception: Wall Street largely sees Tesla as an automotive company, despite its growing energy segment.

Potential Demand Concerns: Some worry about demand, but delivering more vehicles than produced suggests otherwise. Upcoming, more affordable models and refreshes may alleviate such concerns.

Unmet Guidance: Management had indicated they could surpass last year’s results but missed by 19,000 deliveries.

Tesla’s energy business is a bright spot, with record deployments pointing to a promising future. While short-term market reactions focus on missed delivery targets, the long-term trajectory—driven by diversification into energy—remains robust.

Guidance

The issue may stem from the company providing guidance it ultimately failed to meet. Elon Musk is known for making bold statements, many of which are either delayed or miss the mark entirely. For instance, he projected a 20-30% volume increase for next year, but with the missed Q4 delivery target, it raises questions about the reliability of that forecast. This could be how Wall Street is currently interpreting the situation. Perhaps they'll wait for the earnings report to make a more definitive judgment.

That said, I expected a negative stock reaction to the delivery miss, as Wall Street tends to react predictably in such scenarios. However, the significant beat on energy deployments financially outweighs the delivery shortfall.

Free Cash Flow

From a cash flow perspective, delivering more vehicles than were produced is a positive, as it supports stronger free cash flow. The situation isn’t as dire as it seems—it's just that the company set guidance it failed to achieve, which I believe is the core issue here.

Market Sentiment

Looking ahead, 2025 remains an exciting year with the anticipated launch of new models, the Model Y refresh, and rapid growth in Tesla’s energy business. The more Tesla expands its energy segment, the larger its contribution to overall revenue and profits will become, boosting margins over time.

Annual Sales Decline: Tesla reported its first-ever annual decline in vehicle deliveries, with 1.789 million units delivered in 2024, slightly below the 1.793 million units anticipated by analysts and down from 1.809 million in the previous year.

Regarding the Cybertruck the Silver Tin Cans, there are lingering questions. Pre-orders reportedly neared 2 million, even if half were canceled, leaving about 1 million vehicles. Yet, Tesla has only delivered around 12,000 units so far. One would expect those numbers to increase more rapidly quarter over quarter. Hopefully, the upcoming earnings call will provide clarity on this front.

While the headlines might suggest an overreaction, it’s worth noting the stock had already experienced a significant run-up in recent weeks, much of which was likely priced in. Tesla’s stock remains expensive, and Wall Street often plays the short-term game. Long-term investors, however, can focus on the broader picture and growth potential.

Market Impact: Tesla's performance has had a notable impact on broader market indices, contributing to declines in the S&P 500 and Nasdaq.

Conclusion

In summary, the 6% stock dip isn't surprising given the missed guidance, but the financial positives from energy deployment and other growth areas provide a counterbalance. Wall Street's focus on short-term metrics contrasts with Tesla's longer-term narrative.

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