Time To Sell Tesla Stock After Earnings?

Tesla Stock Analysis

Tesla (NASDAQ:TSLA) has been on a stellar run over the past year, especially after Donald Trump’s election. Elon Musk turned into a political heavyweight essentially overnight and many believe that Elon’s connections with the White House will let him score significant business wins too. However, that hasn’t happened to be the case, at least not yet. Tesla disappointed in its latest Q4 earnings report. Let’s take a look into what has happened.

Tesla’s Q4 2024 Earnings Report

Tesla missed top-line estimates and reported $25.71 billion vs $27.27 billion expected. TSLA shares went down 6% immediately. Expectations were elevated after the stock went on a monster run. The EPS came in at $0.73 vs. $0.77 projected. Gross profit also declined 6% year-over-year due to pricing cuts.

The only bright spot was Tesla deploying 11 GWh of energy storage.

As for its deliveries, it delivered 495, 570 vehicles. It is a quarterly record, but it did fall short of internal targets. Q4 annual deliveries were at 1.79 million vehicles and is down 1.1% from 2023. This is Tesla’s first annual decline. Tesla produced 459,000 vehicles in Q4. The sales figures look even worse when you take out North America.

It has also made progress on Full Self-Driving (FSD) V13.2 and plans for unsupervised FSD in California/Texas by mid-2025. Plus, Tesla talked about a lower-priced SUV called “Model Q,” and an updated Model Y to boost 2025 growth.

The Market Reaction So Far

TSLA stock immediately fell 5% after the announcement. However, it rose as investors got to know about Tesla starting to produce more affordable vehicles. They expect to start robotaxi production at full volume in 2026, and the stock is down just 2% as of writing due to the excitement behind AI and automation. Wall Street seems to care mostly about AI.

The Bottom Line

Analysts seem pretty divided and despite the bearish report, some are still optimistic due to Tesla talking about automation and AI more.

That said, Tesla remains one of the most expensive stocks in the market right now. There are very few examples where paying 122 times forward earnings turned out to be a good investment. If Tesla’s automation promises end up taking years and years like FSD, there is going to be a lot of downside risk. It might be time to start taking some profit.

Tesla Stock Analysis

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