- Musk’s attitude on Tesla’s Wednesday earnings call eased investor worries about Twitter drama.
- Solid fourth quarter results and an in depth plan for the yr ahead helped, too.
- Musk is anticipated to share more at Tesla’s Investor Day on March 1.
Tesla CEO Elon Musk turned down the drama Wednesday night to quell investor fears concerning the electric car-maker’s performance.
Investors went into Tesla’s earnings announcement Wednesday feeling trepidation, especially given signs the CEO was distracted by a series of gaffes at Twitter. But Musk quelled these fears with solid fourth-quarter results, a confident outlook for the yr, and a dose of normalcy.
“The entire noise for the last three months about whether Twitter is that this distraction evaporated yesterday when investors saw these results,” said Martin French, a managing director on the consultancy Berylls.
Tesla reported impressive fourth-quarter results, with earnings-per-share of $1.19, exceeding analyst expectations, and automotive gross margins of 25.9%. On top of that, Musk reassured investors that the corporate is expecting improvements in demand because it ramps as much as annual production of two million vehicles in 2023. That is up from the 1.37 million cars Tesla built last yr.
“I genuinely think that everyone believes that Tesla will do it,” French said. “Margins are still high, they’re still generating money — I might say there is no real reason for anyone to be too nervous.”
Musk addresses demand worries
On a call with investors following fourth quarter results, Musk addressed the demand worries head-on.
“I would like to place that concern to rest,” the CEO said, noting that Tesla orders are coming in at twice the speed of production after the corporate recently slashed prices on its hottest models.
“Price really matters. I feel there’s just an unlimited variety of people who need to buy a Tesla automobile but cannot afford it. And so these price changes really make a difference for the typical consumer.”
Confident, even-handed answers like this were what investors wanted to listen to Wednesday, said Stephen Beck, founder and managing partner of consultancy cg42.
“Tesla investors were fearful that Musk wasn’t focused,” Beck told Insider. “His presence and projection of confidence relative to the performance of Tesla – and the numbers being strong on top of it – put plenty of investors comfortable.”
Tesla’s long-term strategy satisfies investors
Along with strong results, Musk presented investors with a rosy picture for the yr ahead, including a goal of constructing between 1.8 million and a couple of million vehicles in 2023 because of latest production capability in Nevada and Texas.
The CEO also promised more on the corporate’s strategic vision at an investor day on March 1.
This news was “exactly what the bulls wanted to listen to,” Wedbush analyst Dan Ives wrote in a note, “and the bears (for now) will return into hibernation mode.”
The planned investor day is a welcome likelihood for Tesla to update shareholders on plans for brand spanking new platforms in addition to expansion plans and enhancements to production. It is also likely a likelihood for Tesla to goose its stock price, which lost 65% of its value in 2022, largely on account of Musk’s acquisition of Twitter.
But investors left the earnings call yesterday reassured that Musk can manage each corporations directly, said Darrell Martin, CEO of Apex Trader Funding.
“In a yr once we’re expecting a recession, for the corporate to return out of the gate like this with strong earnings and a plan for easy methods to move forward through a troublesome environment with affordability – that is just huge,” Martin said.