Investor Concerns Mount as Tesla Stock Faces Decline

Following a doubling in value the previous year, Tesla's (TSLA) stock has plummeted early in 2024 ahead of sales and earnings for the fourth quarter, as experts have revised lower profit expectations for the last few months of 2023.

Adam Jonas, an analyst with Morgan Stanley, maintained an overweight rating for the shares on Monday while lowering his price objective for Tesla to 345 from 380. The seasoned Tesla bull stated that when the company releases its fourth-quarter numbers late on Wednesday, he anticipates modest growth and profitability in 2024.

On Sunday night, Tesla started to distribute FSD Beta Version 12 to a select group of paying customers.

This comes after Tesla said on January 2 that fourth-quarter deliveries surpassed Wall Street forecasts, with the multinational EV behemoth delivering a record-breaking number of cars and meeting full-year projections.

Tesla, owned by Elon Musk, said that it delivered 484,507 cars in the fourth quarter of 2023 and 1.81 million in total, exceeding its target of 1.8 million.

Analysts' response was modest, though, as Wall Street seemed to be more concerned with year-end profits and prospective profit challenges in 2024. From $3.81 at the end of the previous year to $3.63 now, the analyst consensus for 2024 EPS has decreased. By the end of January 2023, it was $5.65.

Tesla's stock has dropped 16% so far in January, below critical levels of support, as experts wait for information on car gross profit margins (excluding regulatory incentives) and whether or not vehicle prices will level off.

The most common query among investors ahead of Wednesday's Q4 reports is whether now is a good time to buy or sell Tesla shares.

The Major Drawbacks

Range anxiety, lengthy charging periods, and relatively expensive EV pricing are some of the major drawbacks EV manufacturers must overcome, especially in light of the recent sharp decline in petroleum prices.

According to the Wall Street Journal, Tesla has not helped itself by relying too much on the pricey Cybertruck instead of adapting to the successful business models of Chinese firms like EV juggernaut BYD, which increased market dominance by producing reasonably priced EVs.

Tesla now has a greater competitive disadvantage. The Cybertruck, which was unveiled in November of last year, had a 50% shorter range (250 miles), and according to Wired, it cost $60,990, which was 53% more than what had been promised in November 2019.

With his acquisition of Twitter (now X) and his desire to create a generative AI competitor to OpenAI and others, Musk has diverted attention from Tesla. According to Bloomberg, he appears to be holding the Tesla board hostage by requesting a rise in his ownership from 13% to 25% of the business in order to position Tesla as a leader in robots and artificial intelligence.

This begs a number of questions, including: Will Musk quit Tesla if he doesn't get his way? Will he sell the business to a rival who is more eager to compete in the EV industry? Why would Musk's time spent on robots and AI be rewarded by the Tesla board when repairs to the company's problems go unaddressed?