Tesla Earnings Miss Targets, Stock Rallies on Future Promises

After reporting its first-ever year-over-year sales decline, Tesla Inc. fell short Wall Street analysts’ expectations, but after-hours investors seemed happy with the overall message from the EV maker, pushing the stock up in post-bell trading.

Tesla is expected to report Q4 revenue of $27.21 billion, according to Bloomberg, an 8.1% rise from a year ago. From a profitability standpoint, the Street is expecting adjusted EPS of $0.75, translating to an adjusted net income of $2.67 billion.

However, the EV maker actually reported Q4 revenue of $25.7 billion, which was an increase of 2% compared to the year, but its automotive revenue was down 8% to $19.8 billion. It’s Q4 net income also fell a bit short of expectations at $2.31 billion — a 71% drop from the same quarter last year.

For the full year, Tesla reported net income of $7.1 billion on revenue of $97.7 billion. The revenue figure was up a scant 1%, but the net income slid 53% compared to full-year 2023 numbers. The company’s automotive revenues were down 6% to $77.1 billion.

Other downers

Tesla’s operating income decreased 23% to $1.6 billion in Q4, resulting in a 6.2% operating margin. The company said it was impacted by reduced S3XY vehicle sale pricing, increases in operating expenses driven by AI and other R&D projects, and growth in Energy Generation and Storage and Services and Other gross profit.

The company also noted is took hits due to lower cost per vehicle, including lower raw material costs partially offset by lower fixed cost absorption from production decrease YoY and higher regulatory credit revenue.

Earlier in the month Tesla said it delivered 495,930 vehicles globally in the final quarter of 2024, missing analyst estimates of around 510,400. However, the total is higher than the 463,000 delivered in Q3 and the 484,500 delivered a year ago.

Tesla delivered 1.78 million vehicles in 2024, missing analyst estimates for 1.8 million and resulting in an annual total below 2023’s 1.8 million vehicles delivered. It was Tesla’s first year-over-year decline, suggesting tougher competition, flattening demand and global economic conditions may be hurting the company.

More Tesla News

• Tesla Sales Take First Full-Year Fall; Musk’s Politics Catch Some Blame
• Is Musk’s Political Shift Hurting Tesla?
• Tesla Autopilot Takes New Heat

Happy together

Despite the disappointing report, Tesla stock is on the rise in after-hours trading — and after it spent the entire day in the red, down just under 3%. In early evening trading, it’s gained a bit more than $17 per share, sending it over the $406 per share mark — a jump of just under 4.5%.

Much of that is tied to cheery news delivered in the earnings report, starting with keeping prices low for new buyers.

“Affordability remains top of mind for customers, and we continue to review every aspect of our cost of goods sold,” the company said in its earnings report. It added that those costs had hit their lowest level ever in the fourth quarter, at less than $35,000, driven by lower costs of raw materials,” the company told investors.

It also doesn’t hurt that the new Model Y — dubbed Juniper — is starting to find its way to buyers. However, the big selling point is the not-so-veiled reference to expectations that its autonomous driving technology is going to get some favorable treatment from the Trump administration.

“Our purpose-built Robotaxi product – Cybercab – will continue to pursue a revolutionary ‘unboxed’ manufacturing strategy and is scheduled for volume production starting in 2026,” according to the company.

Analysts agree that’s one of the drivers, although not necessarily that it will happen.

“People are readingin to the results that FSD and robotaxi are potentially in the cards in the next couple of years,” Will Rhind, CEO of global ETF issue GraniteShares told Reuters.