Tesla Shares Tumble as Earnings Disappoint

Tesla shares plummeted 11% on Thursday, eroding $73 billion in market value in one day, after the electric carmaker's disappointing earnings call and warnings of slowing growth.  

The firm's subdued outlook, predicting "notably lower" sales growth in 2024, stems from its ongoing development of a lower-priced, next-generation vehicle. Despite a 38% increase in deliveries last year, it fell short of its targeted 50% annual growth rate.

Despite price cuts to boost sales, Tesla's operating margin halved due to increased costs related to the production of the Cybertruck.

Tesla's fourth-quarter financial results also underwhelmed, with adjusted earnings per share down 40% and revenue below market forecasts. Following a string of better-than-expected results, this is the second consecutive quarter that the company has missed analysts' earnings estimates.

Elon Musk, Tesla's CEO, warned that Chinese electric car brands could "demolish" rivals. This revelation, coupled with escalating competition from Chinese firm BYD and the threat of anti-dumping investigations, has sparked concern among investors.

Although Tesla's earnings were disappointing, analysts remain optimistic about the firm's prospects. The impending launch of its lower-cost vehicle and a more favorable economic environment, with potentially lower interest rates, are seen as potential catalysts for the company's recovery.

While some analysts remained optimistic about Tesla's long-term prospects, others expressed disappointment over the lack of clarity from management regarding ongoing price cuts, margin structure, and fluctuating demand.