TESLA SHARES NUDGE HIGHER DESPITE 15 MONTH SLIDE, AHEAD OF Q1 REPORT
- Shares to their lowest point since January 2023 on Monday, ahead of Q1 report
Tesla shares edged higher on Tuesday ahead of the electric car maker's first-quarter results to be announced today, with analysts expecting the company's lowest gross profit margin in more than six years on the back of a 15-month slide.
The stock was up 0.7% at $143 in premarket trading ahead of the report, due after the close of trading.
Despite the slight uptick, the automaker earlier this month reported an 8.5% decline in deliveries and rising inventories. Over the weekend, it announced the latest in a series of price cuts globally on the Model 3, Model Y and other models, further eating into margins.
Tesla announced it would cut the prices of three of its five models in the US last week as the company faces falling sales, stiff competition in the electric vehicle market and the recall of nearly 4,000 cybertrucks due to a potentially fatal flaw with the accelerator.
In a damning blow, CEO Elon Musk also announced Tesla would axe 10 per cent of its global workforce of circa 140,000 earlier this month, claiming the redundancies would 'enable us to be lean, innovative and hungry for the next growth phase cycle'.
Several analysts now expect Tesla's annual deliveries to fall for the first time in 2024 after years of double-digit growth.
The company warned in January that delivery growth would be 'notably lower' this year, signaling that price cuts would be insufficient to lift demand.
Tesla shares have lost about 43% so far this year, and is among the worst performers on the S&P 500 index.
Wall Street expects Tesla's automotive gross margin excluding regulatory credits to be 15.2%, according to 20 analysts polled by Visible Alpha, down from 19% a year earlier and the lowest since the fourth quarter of 2017.
Analysts on average see March-quarter revenue down 5.05% to $22.15 billion, according to LSEG data.
Shares slid to a 15-month low on Monday, dropping for the seventh day straight and reaching its lowest price since January 2023.
Prices were cut on cars in the US, Chinese and European markets this month, as well as the company's premium driver assistance system.
Elon Musk will likely face pointed questions from investors during the post-results conference call about the fate of the so-called Model 2, a low-cost vehicle he had promised in January would be available in 2025.
Reuters exclusively reported earlier this month that Tesla had scrapped plans for the model and shifted focus to building a self-driving robotaxi on the same small-car platform.
Musk initially posted on social media that 'Reuters is lying,' but has yet to identify any inaccuracies or clarify the fate of the model. Investors had pinned hopes for sales growth on the Model 2.
Tesla also reported a decline in vehicle deliveries in the first quarter, its first in nearly four years and also below market expectations.
The firm, in a press release, blamed the fall on a drop in EV car demand, the arson attack at its factory near Berlin and supply-chain issues caused by the Red Sea conflict.
Rumors of a looming layoff had been spreading over the last few months after Tesla asked managers to identify critical team members, paused some stock rewards and canceled some employees' annual reviews, according to the report.
The firm is also expected to shorten Cybertruck production shifts at its Gigafactory in Texas despite Musk having recently insisted that Cybertruck is currently production constrained.
In the US, Tesla recalled nearly 4,000 Cybertrucks this month to fix an accelerator pedal fault that could cause the car to accelerate at top speed.
The US National Highway Traffic Safety Administration (NHTSA) announced last Friday that the firm will replace or repair the accelerator pedal assembly at no charge and owners will be notified through letters mailed to them in June.
The recall comes after a new Tesla owner shared the design flaw in a video, showing how the pedal cover can easily slip forward and become lodged in the interior, effectively locking the car in full acceleration.
Also in April, against the backdrop of shares dropping further, Musk announced he would lay off some 14,000 jobs - accounting for about 10 per cent of the global Tesla workforce.
'There is nothing I hate more, but it must be done,' he said in a company-wide memo first reported by Elektrek.
'This will enable us to be lean, innovative and hungry for the next growth phase cycle.'
Rumors of a looming layoff had been spreading over the last few months after Tesla asked managers to identify critical team members, paused some stock rewards and canceled some employees' annual reviews, according to the report.
'Over the years, we have grown rapidly with multiple factories scaling around the globe,' the memo explained.
'With this rapid growth there has been duplication of roles and job functions in certain areas.
'As we prepare the company for our next phase of growth, it is extremely important to look at every aspect of the company for cost reductions and increasing productivity.'
Musk cited the development of 'some of the most revolutionary technologies in auto, energy and artificial intelligence' in the statement, thanking 'those remaining' for their commitment.
Musk has predicted the imminent arrival of fully autonomous cars for years, but may still be years from delivering, given the steep engineering and regulatory challenges.
He has also raised more questions with recent social media posts about Tesla's self-driving vehicle strategy.
Musk recently teased a 'Robotaxi unveil' on '8/8,' presumably meaning August 2024, and later posted that going 'balls to the wall' on autonomy was a 'blindingly obvious' move.
The billionaire had also been expected to meet India's Prime Minister Narendra Modi on Monday and announce major investments in an auto factory which was expected to produce a small, affordable model.
Musk postponed at the last minute, citing 'very heavy Tesla obligations.'
Read more 2024-04-23T11:47:03Z dg43tfdfdgfd