Putting the buzz surrounding the once-in-a-century GameStop price rally aside, it appears that Tesla, the stock market’s darling, has come short of its profit projections for the sixth consecutive quarter.
According to Tesla’s earnings call on Wednesday, CEO Elon Musk revealed that the electric vehicle maker only amassed a fourth quarter profit of US$0.80 per share on an unadjusted basis. The latest results fall short of analysts’ projections that called for a profit of US$1.03, and are significantly less than the impressive US$2.14 per share registered a year ago. As a result, Tesla’s shares fell by nearly 8% by Wednesday afternoon.
Despite the worse-than-expected earnings call, Musk set aside time to justify Tesla’s market cap, which has soared past $800 billion as of late, becoming the fifth-most valued company in the US. According to Musk, if we assume that Tesla will soon reach anywhere between $50 billion to $60 billion in car sales annually, and if the EV maker’s self-driving technology continues on a trajectory of improvement, then Tesla’s cars will eventually become self-driving robotaxis, with their average usage increasing from 12 hours to 60 hours per week.
This in turn would allow Tesla to charge additional fees, and thus generate more revenue per vehicle. “If you made $50 billion worth of cars, it would be like having $50 billion of incremental profit, basically because it’s just software,” Musk exclaimed during the introductory portion of the call.
Recall however, that less than nine months ago, Musk’s view on his company’s valuation was starkly different than what was portrayed as of recent. Back in May, Musk tweeted that “Tesla stock price is too high,” which ended up sending shares on a downfall of 10%. Nonetheless, the company’s market cap recovered, jumping by more than 450% since.
Information for this briefing was found via Tesla and Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.