Tesla stock price hits eight-month low after earnings

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Tesla’s stock has fallen further after a poorly-received earnings report this week, with a gloomy outlook contributing to the bearish turn in price.

Source: Bloomberg

 

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 Written by: Chris Beauchamp | Chief Market Analyst, London | Publication date: Friday 26 January 2024 15:06

Tesla slumps after earnings release

Tesla shares experienced a significant decline on Thursday, reaching their lowest point in eight months. The drop in share price was largely attributed to disappointment surrounding the company's latest earnings report, which led to a wave of selling.

In its fourth-quarter (Q4) earnings update released on Tuesday, Tesla reported $25.2 billion in sales and earnings per share (EPS) of $0.71. These figures fell short of average analyst estimates of $25.6 billion and $0.73 respectively, according to FactSet.

Price cuts drive weakness in profits

One of the key factors contributing to the decline in profits was Tesla's decision to implement price cuts on its cars. This move resulted in a significant decrease in profit margins, with the company's gross margin during the Q4 standing at 17.6%, the lowest since 2019 and down over 600 basis points (bp) from the previous year.

Tesla's profits for the last quarter dropped by 40% compared to the same period in 2022, while revenue only experienced a modest 3% year-over-year growth.

Full-year outlook remains weak

For the full year of 2023, Tesla reported EPS of vague warning of "notably lower" output in 2024. This lack of clear guidance from CEO Elon Musk and the company raised further doubts and criticism.

Tesla stock price – technical analysis

The Tesla share price has resumed its long-term downtrend which began in November 2021 and is now trading at levels last seen in May 2023 with the March and April 2023 lows at $163.91 to $152.37 being eyed.

Tesla weekly chart

Source: TradingView

The fact that a daily chart, and it being Friday, also a weekly chart close will most likely be made below the October 2023 trough at $194.07 is technically bearish.

Resistance now comes in at the late-October 2023 low at $194.07 and also at Thursday’s $206.77 to $193.00 price gap.

Only a currently unexpected bullish reversal and rise above the last reaction high on the daily candlestick chart – a daily high which is higher than that of the preceding and following day – would lead technical analysts to question their bearish outlook. This was made on Monday at $217.80.

Tesla daily chart

Source: TradingView

 

 

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