Tesla (TSLA) is an electric vehicle company that also has a substantial energy generation and storage business. The company is known for its innovative technology, autonomous driving features, and advanced battery systems. Tesla has manufacturing plants located in the U.S., China, and Germany, with business operations all over Europe and the Asia-Pacific.
Founded in 2003 by American duo Martin Eberhard and Marc Tarpenning, it is now headed by CEO Elon Musk and is one of the most valuable automakers in the market.
About Tesla Stock
With a valuation of $1.14 trillion, the company has the highest market capitalization in the EV industry. TSLA stock is down 17% over the past month despite a strong January start where it gained 12% in the opening two weeks. Further, the stock is down 28% from its 52-week high set on Dec. 18.
Tesla’s Fourth-Quarter Results
Tesla released its fourth-quarter results on Jan. 29, posting revenue of $25.71 billion, up 2.1% year-over-year but missing analysts’ estimates of $27.5 billion. The EV company saw a profit of $2.32 billion in the quarter, translating to $0.73 on a per-adjusted-share basis, missing Wall Street’s $0.73 per-share expectations.
The company reported $19.8 billion in automotive revenue, missing analysts’ $21.41 billion estimate. Energy revenue came to $3.06 billion but fell short of analysts’ $3.13 billion estimates while Services revenue totaled $2.85 billion, beating analysts’ $2.81 billion estimates.
The company reported an operating margin of 6.2%, down from 8.2% reported in the same quarter last year, and had a gross margin of 16.3%, also down from 17.6% in the same quarter last year. The EV company ended the year with a cash balance of $36.56 billion, compared to 2023’s $29 billion balance. Free cash flow generated during the quarter came to $2.03 billion against $2.06 billion generated in Q4 2023.
Tesla is gearing up for the launch of its unsupervised full self-driving capabilities in Austin, Texas. If is robotaxi fleet is successful, it could pave a new pathway for the company by improving its top-line growth and Services gross margin.
Musk’s Impact on Tesla
Tesla’s stock is struggling now with investors worried that Musk is too “distracted” with his new position as the head of the Department of Government Efficiency (DOGE). He is currently occupied with reducing federal expenditures and optimizing operations.
The Tesla CEO already has multiple positions across several companies besides Tesla such as SpaceX, xAI, Neuralink, and now DOGE. Up until now, investors didn’t seem too worried about this fact. Investors were initially positive about Musk’s relationship with Trump, sending the stock up more than 70% after Election Day.
Things are starting to change, though. Last week, Musk was reported to be part of an unsolicited bid for the nonprofit that controls OpenAI, the developer of ChatGPT. The deal was said to be worth around $97 billion and was swiftly rejected by OpenAI CEO Sam Altman who tweeted “no thank you” on Wednesday.
Oppenheimer Analyst Colin Rusch has labeled the move as a “distraction” for Elon Musk amid challenges from Tesla. The analyst gave a “Hold” rating on TSLA stock with no price target.
Rusch highlighted the work Tesla has done this year with its robotaxi while also pointing towards Musk’s involvement in the current political scenario as a close aide to President Donald Trump. Rusch believes Musk’s political involvement has earned him fans, but has also exposed him to the risk of alienating consumers and employees.
OpenAI or Twitter 2.0?
Musk’s bid for OpenAI spurred a lot of speculation among investors with many believing that Tesla stock would crash like it did back in 2022 when Musk bought social media company Twitter. Tesla was trading at $340.79 on April 14 when Musk made a bid, and closed at $229 on Oct. 28, when the deal closed, resulting in a 33% fall from the pre-bid price level.
As such, investors who held TSLA through Twitter deal might view the current more negatively. Despite that, there is still one major issue with the deal. To facilitate any multibillion-dollar deal Musk will have to sell his shares in Tesla much like he did to buy Twitter. Investors aren’t particularly fond of insiders selling shares, so investors should brace for some volatility.
Should You Buy the Dip in TSLA?
Amid the recent bearish pressure, TSLA stock has a consensus “Hold” rating from analysts. The stock is under the view of 39 analysts with 13 “Strong Buy” ratings, two “Moderate Buy” ratings, 14 “Hold” ratings, and 10 “Strong Sell” ratings. This means investors are better off waiting on the sidelines with Tesla now.
