Tesla Stock Rises After Q1 Earnings: Here’s How the Wall Street Reacted

Tesla stock (NYSE: TSLA) is trading sharply higher in early US price action today as markets give a thumbs up to its Q1 2024 earnings. Here are the key takeaways from the Elon Musk-run company’s earnings and how Wall Street analysts reacted to the report.

Looking at the headline numbers, Tesla’s revenues came in at $21.30 billion which was well short of the $22.15 billion that analysts expected. The 9% annual fall in Tesla’s revenues is the steepest pace of decline since 2012. However, the fall in revenues shouldn’t have come as a surprise as Tesla’s deliveries plummeted 8% in the quarter, the first YoY decline since 2020.

Tesla also missed bottomline estimates and its EPS of 45 cents fell short of the 51 cents that analysts were expecting. Here are the other key takeaways from the earnings call

Key Takeaways from TSLA’s Q1 Earnings Call

• Musk pointed out that automakers are cutting down on their EV plans amid the slower pace of EV adoption. He however said, “We believe this is not the right strategy and electric vehicles will ultimately dominate the market.”
• In its shareholder deck, Tesla reiterated that the “volume growth rate may be notably lower than the growth rate achieved in 2023. In response to an analyst question on whether its sales growth could be negative in 2024, Musk responded by saying “No, I think we’ll have higher sales this year than last year.” The comments look promising after the steep fall in the company’s Q1 deliveries.
• Tesla also provided an update on its low-cost model and said these “will be made on our current production lines much more efficiently.” Musk said that Tesla should launch the model early next year if not later this year.

Musk Sayd Tesla Should Be Seen as an AI Company

Tesla emphasized that it is much more than a car company and should be seen as an AI or robotics company. Musk is particularly bullish on Tesla’s Optimus humanoid and said, it “will be more valuable than everything else combined.” He added, “We do think we will have Optimus in limited production in the natural factory itself, doing useful tasks before the end of this year. And then I think we may be able to sell it externally by the end of next year.” Musk however termed these timelines as “guesses.”

In response to an analyst’s question on whether he intends to reduce his involvement with Tesla considering his association with multiple other companies, Musk provided a vague answer. He said, he spends most of his time at work and added, “I’m going to make sure Tesla is quite prosperous. And it is — like it is prosperous, and it will be very much so in the future.”

Analysts React to Tesla Earnings

Analysts had mixed reactions to Tesla’s Q1 earnings. Bank of America analyst John Murphy upgraded Tesla stock from a “neutral” to “buy” and said the earnings report “essentially knocked out the recent negative catalysts with facts or reasonable explanations.”

Morgan Stanley analyst Adam Jonas reiterated his $310 target price on Tesla and said, “Results were not as bad as many feared, but questions remain regarding near-term growth/profitability.”

However, Bernstein analyst Toni Sacconaghi reiterated his underperform rating on TSLA and said, “We struggle with why Tesla needs a discrete robo-taxi offering, and we believe widespread deployment of FSD [full self-driving] is 5 – 10 years away, and that FSD will not necessarily be a winner take all market.”

Analyst Joseph Spak reiterated his neutral rating on TSLA but lowered the target price by $13 to $147. In his note, Spak said, “TSLA took the ultimate bear case off the table as there is a new, lower-cost product coming.”

He added, “while we see improvement from 1Q24 levels, we see limited growth for [the] current lineup and lack of clarity on what these ‘new vehicles’ could bring.”

Musk on full autonomy

While Tesla has missed several self-imposed deadlines for full autonomy, Musk was quite categorical that it’s an aim that Tesla continues to strive for. “If somebody doesn’t believe Tesla’s going to solve autonomy, I think they should not be an investor in the company,” said Musk.

He stressed, “I don’t know if it would win with respect to Optimus, or with respect to future products, but there’s enough momentum for Tesla to solve autonomy, even if I disappeared, for vehicles.”

Musk has previously said that Tesla’s valuation would depend on how it progresses toward autonomy. While the stock has lost over half of its market cap, Tesla still remains the world’s most valuable automaker by some distance.