TSLA
📉 Tesla reported weak Q1 results with significant drops in revenue and profits, alongside declining margins, falling short of already lowered market expectations.
🤖 Despite poor financials and no clear guidance, the stock surged post-earnings, fueled by Elon Musk’s optimistic vision focused on Robotaxis, AI, affordable models, and the growing energy division.
🤔 The company faces a crucial juncture: balancing current financial weaknesses in its core EV business against the long-term potential of disruptive technologies and Musk’s renewed commitment.
@bernardodegarcia:
“Few stocks generate as much debate and attention as Tesla’s. Perhaps it’s due to its trajectory, perhaps its CEO. Ultimately, the most volatile stocks tend to be the most watched, and this past week was no exception. After presenting its first-quarter results just two days ago, we saw something paradoxical. Despite figures many would call disappointing, the stock experienced a significant rally the next day, rising over 8%. This type of movement leaves many investors wondering: what’s really happening with Tesla? What does this mean for the company’s future and, more importantly, for the value of its shares? Will they continue to rise? In this video, we’ll break down the key points of the latest quarterly results. The results were, to be clear, very weak. The company reported a drop in both revenue, about 10%, and profits, down 71%. Margins also declined. Key figures like earnings per share, cash generation, and average selling price were negative. Free cash flow increased, but seemingly because capital expenditures were cut by 46%; otherwise, cash flow might have been negative. Overall, the financial print was quite negative, worse than the market expected, even after estimates had been adjusted downward following delivery figures released earlier this month. Wall Street still expects delivery growth year-over-year, though current sentiment suggests this might be optimistic, possibly even negative unless a new, cheap model arrives quickly. To add more uncertainty, the company offered no guidance for the year, citing too much uncertainty. However, despite this financial picture, the market reaction was surprisingly positive. Why the disconnect? The answer largely lies in the post-earnings conference call and Elon Musk’s comments. Musk dedicated significant time to presenting an ambitious vision and offering reassurance on key investor concerns. He assured investors he plans to dedicate more time to leading Tesla. Perhaps most impactful was his reaffirmation of plans for Robotaxis, Tesla’s AI, and cheaper vehicles. Despite disappointing current car sales, Musk insisted plans in these areas are on track with significant progress. He presented Robotaxis not just as a future transport service but as a potential paradigm shift based on Tesla’s vast vehicle fleet and AI capabilities, suggesting it could make Tesla the world’s most valuable company. He also confirmed that plans for more affordable models remain a priority, with development advancing and production expected to start in the first half of 2025, potentially expanding Tesla’s target market to those seeking vehicles around the €25,000 price point. Musk also highlighted the energy division (battery storage, Powerwall, Megapack, solar solutions), which saw strong growth (67% year-over-year) and is seen by analysts as a key part of Tesla’s potential transformation beyond just being an EV manufacturer into an integrated electric energy company with robotics and AI. Currently, energy contributes just over 10% of total revenue but is growing rapidly. So, we have a clear picture: weak Q1 results but a very optimistic future presentation from Musk focused on long-term growth catalysts (Robotaxis, AI, cheaper models, energy). The stock rose because at least part of the market focused on this future vision and Musk’s apparent renewed focus, rather than the past quarter’s figures or the lack of guidance. What comes next? Tesla seems to be at a crossroads. On one hand, the promise of disruptive catalysts and massive growth in areas like Robotaxis (leveraging FSD, which is expanding geographically) and energy. On the other hand, the current financial reality: a weakening core EV business, pressured margins, and no clear short-term guidance. Although the stock rallied, it remains significantly down year-to-date, highlighting recent volatility and challenges. Tesla’s future stock performance will depend on which narrative prevails and, crucially, on execution. Can Tesla commercialize Robotaxis and AI profitably and disruptively soon? Will it successfully launch cheaper models efficiently to revitalize automotive growth? Will the energy business grow enough to become a core valuation pillar? Investors must weigh the probability of success for these future projects against current market challenges and competition, especially from Chinese EV makers.”
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