Tesla Shares Fall As Musk Warns of Slowing Growth

    Tesla Shares Fall As Musk Warns of Slowing Growth
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    The Facts

    • Tesla shares fell more than 12% on Thursday following a lackluster earnings report that fell short of expectations. On Wednesday, the electric vehicle company reported $21.6B in automotive revenue for 2023’s Q4, just a 1% year-over-year rise.

    • Tesla warned of “notably lower” vehicle sales in 2024 while reporting that its Q4 gross margin fell amid price cuts and incentives to boost demand. The company said it was in between two growth waves: the first from 2017-2020, driven by the Models 3 and Y, and the second coming from its next-generation vehicle that could come next year.

    The Spin

    Narrative A

    Tesla's Q4 earnings report shows a company in free fall. In addition to an industry-wide lag in demand, Elon Musk is doing everything in his power to undermine Tesla. From blackmailing investors to receive 25% control to his unhinged behavior on X, Musk is far too volatile of an executive to have any trust in Tesla. Musk may try to play off Tesla’s lackluster revenue and stunted growth by claiming that the company will begin producing its next-generation vehicles in 2025, but it won't prevent the inevitable.

    Narrative B

    While Wednesday’s earnings report and Thursday’s subsequent share price drop are not good news for Tesla, they are hardly significant indicators of the company’s long-term prospects. Following the EV boom of the late 2010s, demand for Teslas was projected to drop. However, the company is working tirelessly to launch its next generation of vehicles, which will allow Tesla to enter a new market. Musk is always pushing the edge, so we should believe him when he says Tesla will start producing more cheap models next year. Tesla is the pioneer of EVs and is still the king of the industry.

    Nerd narrative

    There's a 10% chance that Tesla will be the world’s largest car company by sales before 2035, according to the Metaculus prediction community.

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