Tesla's Earnings: Anticipating Decelerated Growth in 2024.

Tesla's Earnings: Anticipating Decelerated Growth in 2024.

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Tesla stock's fair value estimate is being revised downwards due to the company's strategic shift towards producing sport utility vehicles.

Important Morningstar Metrics for Tesla.

• Key Metrics for Evaluating Tesla's Performance.
• Fair Value Estimate: $200.00
• Morningstar Rating: 3 stars
• Morningstar Economic Moat Rating: Narrow
• Morningstar Uncertainty Rating: Very High

Our Assessment of Tesla's Financial Performance

The main point we gathered from the Tesla TSLA earnings call was the company's shift in strategy towards the development and production increase of their new affordable sport utility vehicle. This change in focus also involves implementing cost-cutting measures for their current vehicles. This is a departure from their previous 2023 strategy, which aimed to lower prices in order to achieve significant volume growth. Consequently, we have revised our forecast to reflect lower growth in deliveries and reduced automotive gross profit margins in the near term. As a result, our fair value estimate for Tesla stock has been adjusted to $200 per share, down from $210. Despite these changes, we maintain our narrow-moat rating.

Tesla's stock experienced a decline of 6% during after-hours trading. The market's response seemed to be influenced by management's projection of a period of slower growth for Tesla in 2024. Based on the current prices, we believe that the shares are fairly valued, as Tesla's stock is trading slightly below our updated fair value estimate, placing it in the 3-star territory. Consequently, we advise investors to exercise patience and wait for the stock to present a substantial margin of safety before considering it as an entry point.

1. Anticipated deceleration in Tesla deliveries.

2. Projected decline in Tesla's delivery rate.

3. Anticipated decrease in the pace of Tesla deliveries.

4. Expected slowdown in the delivery of Tesla vehicles.

5. Tesla's delivery rate expected to decrease.

This shift in strategy will have varying effects on the company's delivery growth in the short and long term. In the short term, we anticipate a modest growth rate of 10% in 2024 and 6% in 2025. These figures are significantly lower than the impressive annual growth of over 50% that Tesla has achieved in the past ten years. However, with the introduction of an affordable vehicle by the end of 2025, we predict that Tesla will once again experience double-digit growth in deliveries by 2026. As this affordable vehicle surpasses the Model 3/Y platform in terms of deliveries, our forecast suggests that Tesla will deliver slightly over 5 million vehicles by 2030.

We anticipate varying profit margins in the near and long term. As Tesla works on creating its cost-effective vehicle and increasing the production of Cybertruck, we anticipate a phase of decreased automotive gross margins, aligning with the 19% generated in 2023. However, in the long run, we maintain our forecast of margin growth as Tesla starts selling its affordable vehicles and reaps the benefits of its cost-reduction strategies.