Topline
Tesla shares rallied Thursday even after delivering a fourth-quarter earnings report that fell short of expectations and sealed a second consecutive year of declining profits, as investors focused on bullish commentary from Tesla CEO Elon Musk and updated production timelines, including for its “robotaxi” driverless cab.
A Tesla charging station in Germany.
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Key Facts
Tesla brought in $25.7 billion of sales last quarter and $0.73 adjusted earnings per share, both far below consensus analyst estimates of $27.3 billion in sales and $0.77 earnings per share, according to FactSet.
The final earnings release of 2024 finalized another difficult year for Tesla’s bottom line, as its full-year net income came in at $8.4 billion, a 23% decrease from 2023 and a 40% decline from 2022’s record $14.1 billion profit, though its full-year revenue rose $97.7 billion, a 1% improvement from 2023’s record.
But Tesla expects its core vehicle business to “return to growth” in 2025, the company said in its earnings presentation.
The company also announced it plans to begin production next year on its “Cybercab” driverless taxi vehicle and to begin making its less expensive cars in the first half of 2025.
The market reaction was a rollercoaster: Shares dropped 5% in after hours trading Wednesday, building on a 2% decline during regular hours, before reversing to a 5% gain by Thursday’s market open, as investors seemingly oscillated between the disappointing Q4 financial results and the positive production updates.
Tesla stock was up more than 4% by late afternoon Thursday, a whipsaw that befuddled even the most established analysts on Wall Street.
Morgan Stanley analyst Adam Jonas questioned in a note to clients “what else may be at work driving the debate around the stock,” while JPMorgan analyst Ryan Brinkman’s recap note questioned why Tesla shares “somehow” gained as much as they did.
Crucial Quote
“I’m not saying it’s an easy path, but I see a path for Tesla being the most valuable company in the world by far,” Musk said on Wednesday’s earnings call. “There is a path where Tesla is worth more than the next top five companies combined,” Musk added. Tesla is the world’s eighth-most valuable company in the world with a $1.3 trillion market capitalization, while the five biggest firms are worth nearly $15 trillion in aggregate. The highly optimistic Musk also teased the idea of a $10 trillion revenue opportunity for Tesla’s “Optimus” humanoid robots.
Chief Critic
“The move higher in Tesla shares bore no relation whatsoever to the company’s financial performance in the quarter just completed or to its outlook for growth in the coming year,” wrote Brinkman, who added Tesla’s share price has “become completely divorced from the fundamentals.”
Key Background
In an earnings call last January, Musk characterized the shrinking bottom line as Tesla moving “between two major growth waves,” an assertion agreed upon by Wall Street. Analysts project a more than 80% increase in Tesla’s free cash flow in 2025 and a further 50% jump in 2026. Earlier this month Tesla announced it delivered about 496,000 vehicles in the fourth quarter, bringing its full-year deliveries to 1.79 million cars, marking the first year-over-year decline since at least 2016. Despite the stalling deliveries and profits, Tesla stock rose throughout 2024 and early 2025, as its share price is up more than 100% over the last 12 months. In addition to hype about Tesla’s advancements in artificial intelligence, including its upcoming driverless taxis and humanoid Optimus robots, Tesla benefited from a sharp, positive reaction from investors to Trump’s victory, with shares up more than 50% since Election Day. Analysts say Tesla will likely benefit from looser regulations under Trump, who Musk enjoys an extremely close relationship with, speaking at his inauguration and donating more than $200 million toward his election efforts. The always controversial Musk has landed in hot water for his right-wing activism, most notably performing a gesture at the inauguration that some characterized as a Nazi salute.
Tangent
Musk did not address some shareholders’ conflict of interest concerns on the Q4 earnings call. The Tesla shareholders forum used for earnings call questions include more than 100 questions on Musk, including ones asking how Musk’s role in the White House cuts into time with Tesla and if Tesla has lost sales due to Musk’s outspoken views, though none on Musk’s political activities were answered Thursday.
Forbes Valuation
Musk is by far the richest person on the planet with a net worth of more than $410 billion, according to our latest estimates. Tesla is the biggest contributor to his fortune, as his 13% extant equity stake is worth more than $160 billion with another 9% equity bonus award for Musk pending appeal, with Musk’s stakes in his other companies including generative AI startup xAI and aerospace and communications firm SpaceX making up most of the rest of his fortune.
Further Reading
