Elon Musk’s attitude on Tesla’s Wednesday earnings call eased investor anxiety over the Twitter drama. Solid fourth-quarter results and a detailed plan for the coming year also helped.
Tesla CEO Elon Musk shrugged off the drama Wednesday night as he sought to allay investors’ fears about the electric carmaker’s performance. Investors were jittery heading into Tesla’s earnings announcement on Wednesday, especially amid signs that the CEO was distracted by a series of gaffes on Twitter.
But Elon Musk quelled these fears with solid fourth-quarter results, a confident outlook for the year and a dose of normalcy. Martin French, a managing director at consultancy Beryls, said yesterday that when investors look at these results, all the noise on Twitter for the past three months has been a distraction.
Tesla reported impressive fourth-quarter results with per-share earnings of $1.19, which exceeded analyst expectations, and an automotive gross margin of 25.9%. On top of that, Elon Musk reassured investors that demand is expected to improve, with the company reaching annual production of 2 million vehicles in 2023. That’s more than the 1.37 million Tesla cars manufactured last year.
I really think everyone believes Tesla will do it,” French said. Margins are still high, they’re still generating money. I would say there’s no real reason for anybody to be too nervous. On a call with investors following fourth-quarter results, Musk brushed off demand concerns. I want to ease that concern, the CEO said, noting that the company recently sold its most popular Announced price reductions on models Tesla orders are doubling the rate of production after the price reduction.
Price really matters. I think there are a large number of people who want to buy a Tesla car but can’t afford it. And so these price changes really do make a difference to the average consumer. Stephen Beck, founder and managing partner at consultancy CG42, said on Wednesday that investors want to hear more confident answers like this.
Beck told Insider, “Tesla investors were worried that Musk wasn’t focused. His presence and the projection of confidence relative to Tesla’s performance and the strong numbers on top of that put a lot of investors at ease. In addition to the strong results Elon Musk painted a bright picture for investors for the coming year, including plans for new production capacity in Nevada and Texas to make 1.8 million and 2 million vehicles in 2023.
The CEO promised more on the company’s strategic vision at an investor day on March 1. The news was just what the bulls wanted to hear, Wedbush analyst Dan Ives wrote in a note, and the bears will (for now) go back into hibernation mode.
The planned Investor Day is a welcome opportunity for Tesla to update shareholders on new platforms as well as expansion plans and production improvements. This is potentially an opportunity for Tesla to boost its share price, which lost 65% of its value in 2022, largely due to Musk’s acquisition of Twitter.
But investors skipped yesterday’s earnings call, said Darrell Martin, CEO of Apex Trader Funding, with Musk managing the two companies simultaneously. “In a year when we’re expecting a downturn, it’s great for the company to come out of the gate with such strong earnings and the ability to move through a difficult environment with plans to move forward,” Martin said.