Tesla wrapped up 2023 on a strong note, delivering an impressive 485,000 cars and trucks during the final quarter of the year. Despite the Nasdaq Composite experiencing a 1.6% dip, Tesla shares only fell six cents to $248.42 — a remarkable result. Meanwhile, Rivian Automotive’s stock faced a significant setback, plummeting 10% to $21.10 after the company reported its own solid delivery figures. Apple also faced a downgrade from Barclays, resulting in a 3.6% decrease in their shares.
Rivian’s Journey to Scale in 2023
Canaccord analyst George Gianarikas reported that Rivian had managed to fix their production issues and commenced scaling operations successfully in 2023. By surpassing production targets by approximately 3,000 units, Rivian ended the year on a high note. Consistent with market expectations, deliveries met or surpassed consensus estimates. Gianarikas expressed his mild surprise regarding the stock’s reaction to this positive news.
Investor Sentiment and Rivian’s Stock Performance
Investors seemed hesitant to dive into the market at the beginning of the new year, as reflected by their lack of interest in purchasing shares. Additionally, the fact that Rivian’s stock had already gained around 30% in the month preceding the delivery report posed an extra challenge.
Gianarikas rates Rivian stock as a Buy with a target price set at $30. Likewise, he rates Tesla shares as a Buy with a target price of $267.
Tesla’s Remarkable Delivery Performance in 2023
Gianarikas acknowledged Tesla’s exceptional delivery performance as well. Against the backdrop of rising interest rates and an economic slowdown, Tesla managed to ship over 1.8 million vehicles in 2023 — surpassing the expectations set for investors.
Tesla Faces Questions Ahead of Earnings Call
As Tesla prepares for its upcoming earnings call on January 24th, analysts and investors are expressing concerns and seeking answers. The delivery report released recently has left many with more questions than answers. One key question is whether the projected 2.2 million deliveries for 2024 are sufficiently conservative. Additionally, there is uncertainty regarding Tesla’s automotive gross margins, which have dropped approximately 10 percentage points from the previous year to around 16% in the third quarter, due to price cuts.
Investors are also wondering how Tesla’s recent focus on Optimus the robot and advancements in its driver assistance software will impact future growth, considering that no new vehicle model is expected to be launched in 2024.
While delivery figures are important, many are eagerly anticipating the earnings call. TD Cowen analyst Jeffrey Osborne suggests that in order to appease investors, Tesla should forecast deliveries of approximately 2.2 million vehicles during the call. Osborne rates Tesla shares as Hold, with a $200 price target.
Pierre Ferragu, an analyst at New Street Research, holds a more optimistic view, rating Tesla shares as Buy with a $300 price target. Although he expects gross profit margins to remain under pressure in the fourth quarter, he predicts an improvement to about 19% by 2024.
Wall Street as a whole seems slightly less enthusiastic, with expectations of a fourth-quarter gross profit margin of about 16% (excluding regulatory credits), similar to the previous quarter, and a modest one or two percentage point improvement anticipated in 2024.
The forthcoming earnings conference call is expected to shed light on the lingering questions surrounding Tesla’s future. CEO Elon Musk’s comments regarding potential further price cuts and interest rates will greatly influence investor sentiment.
While Tesla’s stock experienced a 2.9% decline in early trading on Wednesday, the broader market saw a smaller decline of 0.5% for both the S&P 500 and the Nasdaq Composite.
