London (TIP)- Shares in Tesla plunged as much as 11% after the market opened Thursday, wiping $73 billion off the company’s market value hours after it warned of slowing growth in electric car sales and an existential threat from Chinese rivals. In an earnings presentation Wednesday, the world’s most valuable automaker said its sales growth this year “may be notably lower” than last as it continued developing the “next-generation” vehicle, likely a lower-priced model.
While it reported a sizeable 38% increase in deliveries last year compared with 2022, Tesla had previously targeted a 50% annual growth rate averaged over several years.
Tesla’s (TSLA) financial results for the last quarter also disappointed, with adjusted earnings per share down 40% from a year earlier, and revenue, which rose 3% to top $25 billion, coming in below market forecasts.
It was the second straight quarter the company fell short of earnings forecast by analysts, following a string of better-than-expected results stretching back to the start of 2021.
The stock doubled in price during the course of 2023, but those gains came in during the first half of the year and Tesla shares were off to a weak start in 2024, falling 16% before Wednesday’s earnings report. The stock is currently trading at its lowest level since April last year. January 25th intraday losses were comparable to an unusually large one-day fall of 11.4% in late December 2022. At the time, investors were worried about the outlook for Tesla’s sales and profitability, as well as the health of the US economy.
Tesla’s fourth-quarter earnings also revealed profits under pressure. The firm’s operating margin almost halved to 8.2% from the same period in 2022, driven partly by an increase in costs related to the production of the Cybertruck pickup. The new model went into production at the end of 2023.
Dan Ives, an analyst with market research firm Wedbush, said Tesla’s earnings call provided investors with “minimal answers” to the company’s shrinking margins.