Wed, April 24, 2024 at 9:35 AM EDT
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Tesla 4Q earnings win: Analyst comments on stock price record, report – Business Insider – Business Insider
- Tesla beat analyst estimates for fourth-quarter profit and revenue Wednesday afternoon, and the subsequent stock spike prolonged the automaker’s strong rally in 2020.
- The company announced its Model Y CUV would reach delivery sooner than expected, and projected it would „comfortably exceed“ 500,000 total deliveries in 2020, a 36% gain from last year’s figure.
- The earnings win saw Tesla shares jump as much as 12% to hit a record-high price of $650.88 per share.
- Here’s what four analysts said about the soaring stock price and fourth-quarter earnings win.
- Watch Tesla trade live here.
Tesla bested analyst estimates with its fourth-quarter report on Wednesday afternoon, prolonging its stock surge through 2020 and easing fears of a continued supply struggle.
The automaker’s stock soared as much as 12% Thursday following the blockbuster report. Tesla beat expectations for both quarterly profit and revenue, and noted its 2020 deliveries would „comfortably exceed“ 500,000 vehicles compared to 2019’s 367,500.
The company also accelerated the rollout of its Model Y CUV, saying a „production ramp“ started in January and deliveries would begin by the end of March.
The earnings win drove Tesla shares to an all-time high of $650.88 per share. The stock has already notched several record highs through the new year, granting a hefty compensation package for CEO Elon Musk and establishing the firm as the highest-valued automaker in the US.
Tesla traded at $640.50 per share as of 3:10 p.m. ET Thursday, up about 55% year-to-date.
Here’s what four analysts have to say about Tesla after its positive fourth-quarter figures and surging stock price.
Piper Sandler: „Tesla’s thriftiness continues to impress“
Foto: sourceTesla
Price target: $729
Rating: Overweight
Tesla’s frugality helped the automaker end the quarter with 6.3 billion in free cash, and its success in strategically deploying capital to boost vehicle deliveries prompted a price target upgrade from Piper Sandler’s analysts.
„Predicting capex is a challenge, but Tesla keeps under-spending our estimates, so we’re cutting our forecast to more closely reflect the company’s actual performance,“ the team wrote. „Tesla’s thriftiness continues to impress.“
The company’s strategic investments are set to push deliveries to a lofty record in 2020, and „demand remains a non-issue“ with several new models set to hit markets in the coming years, the analysts wrote.
Despite exciting launches for the Model Y, Semi, and self-driving software on the horizon, the next event to watch is Tesla’s „battery day,“ they added. Power cells are shaping up to be a limiting factor in the company’s production ramp-up, and any positive updates to battery technology or new suppliers could lift a downward pressure for the automaker.
Wedbush: „The bull party will continue“
Foto: Tesla CEO Elon Musk introduces the Cybertruck.sourceAP Photo/Ringo H.W. Chiu, File
Price target: $710
Rating: Neutral
Noted Tesla bull Dan Ives viewed the company’s latest report as „potentially game-changing,“ as stable profitability and healthy cash flow secured Tesla’s spot as a lasting player in the EV space. The 500,000-deliveries estimate is „conservatively positive,“ Ives said, and the company could deliver as many as 550,000 vehicles in 2020 and support a continued rally for the soaring stock.
„The bull party will continue as the aggressive trajectory of Giga 3 production and demand out of Shanghai look very strong out of the gate,“ the analyst wrote.
Wedbush also updated its long-term bull case for the automaker, noting that Tesla shares could reach $1,000 if it can ramp up production in Shanghai and drive demand in China in the years to come. The firm’s new Tesla price target reflects heightened demand for EVs, and past fears around improving production rates are quickly fading, the note said.
„For Musk, despite all the noise over the last year and balancing a myriad of projects at Tesla (while running SpaceX and launch targets) last night completes a „comeback story for the ages“ from the dark days seen last April,“ the team wrote.
Canaccord Genuity: „The leader of the EV revolution“
Foto: Elon Musk at the unveiling of Tesla’s new RoadstersourceTesla
Price target: $750
Rating:
Canaccord Genuity now stands as Wall Street’s biggest Tesla bull, with their latest price target implying a 16% upside from Thursday’s opening price. Though the new target is based on a lofty 2021 EPS projection of $25.03, the firm believes Tesla’s opportunity in „disrupting the legacy transportation industry“ warrants such rapid profit growth.
The analysts also praised Tesla’s advantage in the battery, echoing other firms in emphasizing the importance of its upcoming battery tech event. The automaker’s „greatest near-term risk“ is its Shanghai factory’s exposure to the coronavirus, the analysts noted. If the outbreak is efficiently contained in the coming weeks, Tesla is on pace to reach numerous records in the new year, Canaccord Genuity added.
„Given the numerous positive data points that were discussed and the cornerstone of of continued profitability and free cash flow generation, we view the company as solidly positioned as the leader of the EV revolution,“ the analysts wrote.
CFRA Research: „Unfavorable at current levels“
Foto: Tesla Inc CEO Elon Musk poses with Tesla China-made Model 3 vehicle owners onstage during a delivery event at its Shanghai factory in China January 7, 2020.sourceREUTERS/Aly Song
Price target: $440
Rating: Sell
Despite the massive earnings beat, not all firms lifted their doubts on Tesla’s future growth. The stock’s current risk/reward scenario is „unfavorable at current levels,“ and risks surrounding the Chinese factory’s ramp-up could quickly pull shares lower, CFRA analyst Garrett Nelson wrote.
Tesla failed to report capex figures related to its new factory in Germany, Nelson said, leaving investors in the dark as to whether the facility reaches regular production as efficiently as the Shanghai factory. The analyst downgraded Tesla stock to „sell“ from „hold,“ and his new price target implies a 32% tumble from its Thursday opening price.
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Business
Oil Firms Doubtful Trans Mountain Pipeline Will Start Full Service by May 1st
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Oil companies planning to ship crude on the expanded Trans Mountain pipeline in Canada are concerned that the project may not begin full service on May 1 but they would be nevertheless obligated to pay tolls from that date.
In a letter to the Canada Energy Regulator (CER), Suncor Energy and other shippers including BP and Marathon Petroleum have expressed doubts that Trans Mountain will start full service on May 1, as previously communicated, Reuters reports.
Trans Mountain Corporation, the government-owned entity that completed the pipeline construction, told Reuters in an email that line fill on the expanded pipeline would be completed in early May.
After a series of delays, cost overruns, and legal challenges, the expanded Trans Mountain oil pipeline will open for business on May 1, the company said early this month.
“The Commencement Date for commercial operation of the expanded system will be May 1, 2024. Trans Mountain anticipates providing service for all contracted volumes in the month of May,” Trans Mountain Corporation said in early April.
The expanded pipeline will triple the capacity of the original pipeline to 890,000 barrels per day (bpd) from 300,000 bpd to carry crude from Alberta’s oil sands to British Columbia on the Pacific Coast.
The Federal Government of Canada bought the Trans Mountain Pipeline Expansion (TMX) from Kinder Morgan back in 2018, together with related pipeline and terminal assets. That cost the federal government $3.3 billion (C$4.5 billion) at the time. Since then, the costs for the expansion of the pipeline have quadrupled to nearly $23 billion (C$30.9 billion).
The expansion project has faced continuous delays over the years. In one of the latest roadblocks in December, the Canadian regulator denied a variance request from the project developer to move a small section of the pipeline due to challenging drilling conditions.
The company asked the regulator to reconsider its decision, and received on January 12 a conditional approval, avoiding what could have been another two-year delay to start-up.
Business
Tesla profits cut in half as demand falls
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Tesla profits slump by more than a half
Tesla has announced its profits fell sharply in the first three months of the year to $1.13bn (£910m), compared with $2.51bn in 2023.
It caps a difficult period for the electric vehicle (EV) maker, which – faced with falling sales – has announced thousands of job cuts.
Boss Elon Musk remains bullish about its prospects, telling investors the launch of new models would be brought forward.
Its share price has risen but analysts say it continues to face significant challenges, including from lower-cost rivals.
The company has suffered from falling demand and competition from cheaper Chinese imports which has led its stock price to collapse by 43% over 2024.
Figures for the first quarter of 2024 revealed revenues of $21.3bn, down on analysts’ predictions of just over $22bn.
But the decision by Tesla to bring forward the launch of new models from the second half of 2025 boosted its shares by nearly 12.5% in after-hours trading.
It did not reveal pricing details for the new vehicles.
However Mr Musk made clear he also grander ambitions, touting Tesla’s AI credentials and plans for self-driving vehicles – even going as far as to say considering it to be just a car company was the “wrong framework.”
“If somebody doesn’t believe Tesla is going to solve autonomy I think they should not be an investor,” he said.
Such sentiments have been questioned by analysts though, with Deutsche Bank saying driverless cars face “technological, regulatory and operational challenges.”
Some investors have called for the company to instead focus on releasing a lower price, mass-market EV.
However, Tesla has already been on a charm offensive, trying to win over new customers by dropping its prices in a series of markets in the face of falling sales.
It also said its situation was not unique.
“Global EV sales continue to be under pressure as many carmakers prioritize hybrids over EVs,” it said.
Despite plans to bring forward new models originally planned for next year the firm is cutting its workforce.
Tesla said it would lose 3,332 jobs in California and 2,688 positions in Texas, starting mid-June.
The cuts in Texas represent 12% of Tesla’s total workforce of almost 23,000 in the area where its gigafactory and headquarters are located.
However, Mr Musk sought to downplay the move.
“Tesla has now created over 30,000 manufacturing jobs in California!” he said in a post on his social media platform X, formerly Twitter, on Tuesday.
Another 285 jobs will be lost in New York.
Tesla’s total workforce stood at more than 140,000 late last year, up from around 100,000 at the end of 2021, according to the company’s filings with US regulators.
Musk’s salary
The car firm is also facing other issues, with a struggle over Mr Musk’s compensation still raging on.
On Wednesday, Tesla asked shareholders to vote for a proposal to accept Mr Musk’s compensation package – once valued at $56bn – which had been rejected by a Delaware judge.
The judge found Tesla’s directors had breached their fiduciary duty to the firm by awarding Mr Musk the pay-out.
Due to the fall in Tesla’s stock value, the compensation package is now estimated to be around $10bn less – but still greater than the GDP of many countries.
In addition, Tesla wants its shareholders to agree to the firm being moved from Delaware to Texas – which Mr Musk called for after the judge rejected his payday.
Business
Stock market today: Nasdaq futures pop, Tesla surges after earnings with more heavyweights on deck
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Tech stocks rose on Wednesday, outstripping the broader market as investors welcomed Tesla’s (TSLA) cheaper car pledge and waited for the next rush of corporate earnings.
The Nasdaq Composite (^IXIC) rose roughly 0.6%, coming off a sharp closing gain. The S&P 500 (^GSPC) was up 0.2%, continuing a rebound from its longest losing streak of 2024, while the Dow Jones Industrial Average (^DJI) fell 0.1%.
Tesla shares jumped nearly 12% after the EV maker’s vow to speed up the launch of more affordable models eclipsed its quarterly earnings and revenue miss. That cheered up investors worried about growth amid a strategy shift to robotaxis and the planned cancellation of a cheaper model.
The results from the first “Magnificent Seven” to report have intensified the already high hopes for Big Tech earnings, that the megacaps can revive the rally in stocks they powered. The spotlight is now on Meta’s (META) report due after the market close, as the Facebook owner’s shares rose after the Senate voted for a potential ban on rival TikTok. Microsoft (MSFT) and Alphabet (GOOG) next up on Thursday.
Meanwhile, Boeing (BA) reported better than expected first quarter results before the opening bell with a loss per share of $1.13, narrower than the $1.72 estimated by Wall Street. Shares rose about 2% in morning trade.
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