Tesla’s share price fell 6.1% on Thursday 2 January, the second trading day of the year, as a delivery miss prompted investors to flee the stock.
Tesla (NASDAQ:TSLA) posted a quarterly trading update that showed it had produced approximately 459,000 vehicles and delivered 495,570 during the fourth quarter (Q4) 2024.
The figure fell short of the 498,000 consensus expectation among analysts polled by FactSet. It is the first time Tesla has missed analysts’ quarterly delivery expectations in over a decade.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
“The shine has come off Tesla, after its delivery numbers for the final quarter of 2024 fell well short of expectations,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
The 6.1% decrease in Tesla’s share price wiped approximately $175 billion off its market cap, according to Forbes – around the total value of HSBC.
While implying a 2.3% increase in quarterly deliveries year-over-year, the Q4 numbers meant that Tesla’s total deliveries in 2024, 1,789,226, fell below 2023’s total of 1,808,581. This is the first time that Tesla’s annual deliveries have fallen year-over-year since 2011.
Tesla’s share price plummeted, as investors ditched the stock on fears that its core car-making business is struggling to withstand increasing competition, and that its product lines are overpriced. The question of whether to buy Tesla shares hinges on how damaging this dip in electric vehicle deliveries is compared to its long term goals.
“Although Tesla wants to be seen as a robotics company at its core, its underlying performance as a carmaker is closely watched, and these numbers demonstrate how tough the industry is right now,” says Streeter. “Chinese rival BYD is nipping at its heels, with a jump in sales for December.
Tesla’s share price has nonetheless gained 53% over the past year, and it was the second-most-bought stock of December on interactive investor’s investing platform.
Tesla CEO Elon Musk and Donald Trump have been closely linked since the US election campaign, which saw Musk campaign enthusiastically for Trump. Musk is also in line to co-head a new Department of Government Engineering during Trump’s second term in the White House.
“Trump’s victory in the US elections sent Tesla stock soaring,” says Streeter. “There are hopes policies would be pro-Tesla in the coming years, with a potential acceleration of regulatory approval for Tesla’s self-drive technology being eyed.”
Tesla Cybertruck explodes outside Trump hotel
Disappointing delivery numbers coincided with a seemingly politically-motivated incident on Thursday to compound a miserable start to 2025 for Tesla’s share price.
A Cybertruck filled with fuel canisters and firework mortars exploded while parked in front of the Trump Hotel in Nevada on New Year’s Day. The driver, identified as serving US Special Forces soldier Matthew Alan Livelsberger, shot himself before the explosion.
Police are investigating whether or not there is any political motivation behind the incident. While none has yet been identified at time of writing, there is a possibility it is linked to a deadly attack that occurred on the same day in New Orleans, according to the BBC.
How expensive are Tesla shares?
Despite losing $175 billion in value in a single day, Tesla is still one of the world’s most valuable companies. Tesla shares closed at $379.28, down from $423.79 on the final trading day of 2024.
This makes Tesla’s share price very expensive compared to its fundamental performance. It has a trailing P/E ratio of 103.98, and a forward P/E ratio of 121.81; on both metrics, it is the most expensive stock in the Magnificent Seven. For comparison, the Nasdaq 100 – not known for its modest valuations – has a trailing P/E ratio of 33.07 and a forward P/E ratio of 27.12 (according to analysis from Birinyi Associates, via the Wall Street Journal).
This extreme valuation is anchored in an assumption that Tesla will, in time, solve the question of autonomy, and that its value will then go through the roof. Disruptive innovation-focused fund manager ARK Invest, and its CIO Cathie Wood, have set their 2029 price target for Tesla shares at $2,600. Their reasoning assumes that 90% of Tesla’s revenue by then will be derived from self-driving ‘robotaxis’.
This is why having the ear of the US President-elect is such a key advantage for Musk. While ARK’s valuation sounds outlandish, fast-tracked approval of Tesla’s autonomous driving technology could give it a head start in the robotaxi race that would make a quarterly vehicle deliveries miss seem like small potatoes.
-
Nationwide to cut interest rates on more than 20 savings accountsNationwide Building Society is to slash the interest rates on several savings accounts. We list the accounts affected and when the changes will take place
-
House prices: The regions tipped to see the biggest rise in 2025House prices are forecast to increase across the UK this year, but with significant regional variation, which region will see the biggest rise in property prices?
