Tesla (NASDAQ:TSLA) stock surged nearly 4% on Thursday, as investors looked beyond a weak 4Q24 earnings report and focused on Elon Musk’s future plans.
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The EV giant missed expectations on both revenue and earnings, with total revenue rising 2.1% year-over-year to $25.7 billion but falling $1.44 billion short of estimates. Automotive revenue declined 8% to $19.8 billion, with $692 million coming from regulatory credits. Profitability also weakened – operating income dropped 23% year-over-year to $1.6 billion, while the auto gross margin (excluding credits) stood at 13.6%, below the Street’s 16.3% forecast. The end result was adj. EPS of $0.73, $0.04 below analyst expectations.
Tesla said it expects delivery growth in 2025 but refrained from committing to the 20%-30% growth target.
All that, however, seemed to take a back seat as Musk laid out Tesla’s upcoming plans. The president’s ‘First Buddy’ stated that Tesla is significantly increasing its focus on autonomy and expects to reap the benefits of its AI investments. He suggested the company could achieve a market cap exceeding the combined value of the next five most valuable companies. Musk also predicted an “epic” 2026 and a “ridiculous” 2027 for the company.
Musk is no stranger to grandiose statements, but as for more concrete intentions, the company reaffirmed its plans for the next-generation vehicle platform, with a lower-cost vehicle set to begin production in the first half of 2025 and the Cybercab expected to enter production and launch in 2026. Musk also said that Tesla will launch unsupervised FSD (full self-driving) as a paid service in Austin this June, ahead of the originally expected timeline of late 2025.
Wedbush analyst Daniel Ives thinks the latter represents a “significant validation that TSLA’s Unsupervised FSD is in the final stages of being ready for the public and the biggest headwinds remain on the regulatory side, not due to technological capabilities.” With unsupervised FSD anticipated to roll out across the U.S. by the end of 2025 and globally by the end of 2026, Ives thinks this will be a “focus of the bulls.”
In general, Ives’ take is that the bulls who believe in Tesla’s AI and autonomous vision likely got a confidence boost from what was on offer. On the other hand, the same can be said for the bears or skeptics who focus solely on numbers and margins, disregarding the autonomous narrative, who are bound to “feel more confident in their negative thesis.”
There’s no doubt which side Ives supports here. The analyst rates Tesla shares as an Outperform (i.e., Buy), along with a Street-high $550 price target. Investors could be pocketing gains of 37%, should Ives’ thesis play out as expected this year. (To watch Ives’ track record, click here)
The Street’s overall take is more cautious. The stock claims a Hold (i.e., Neutral) consensus rating, based on a mix of 12 Buys and Holds, each, plus 9 Sells. Most appear to think the shares are due a pullback; the average target stands at $335.10, a figure that sits 16% below the current share price. (See Tesla stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
