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- Musk’s attitude on Tesla’s Wednesday earnings call eased investor worries about Twitter drama.
- Solid fourth quarter results and a detailed plan for the year ahead helped, too.
- Musk is expected to share more at Tesla’s Investor Day on March 1.
Tesla CEO Elon Musk turned down the drama Wednesday night to quell investor fears about the electric car-maker’s performance.
Investors went into Tesla’s earnings announcement Wednesday feeling trepidation, especially given signs the CEO was distracted by a series of gaffes at Twitter. But Musk quelled these fears with solid fourth-quarter results, a confident outlook for the year, and a dose of normalcy.
“All of the noise for the last three months about whether Twitter is this distraction evaporated yesterday when investors saw these results,” said Martin French, a managing director at the consultancy Berylls.
Tesla reported impressive fourth-quarter results, with earnings-per-share of $1.19, exceeding analyst expectations, and automotive gross margins of 25.9%. On top of that, Musk reassured investors that the company is expecting improvements in demand as it ramps up to annual production of 2 million vehicles in 2023. That’s up from the 1.37 million cars Tesla built last year.
“I genuinely think that everybody believes that Tesla will do it,” French said. “Margins are still high, they’re still generating money — I would say there’s no real reason for anyone to be too nervous.”
Musk addresses demand worries
On a call with investors following fourth quarter results, Musk addressed the demand worries head-on.
“I want to put that concern to rest,” the CEO said, noting that Tesla orders are coming in at twice the rate of production after the company recently slashed prices on its most popular models.
“Price really matters. I think there’s just a vast number of people that want to buy a Tesla car but can’t afford it. And so these price changes really make a difference for the average consumer.”
Confident, even-handed answers like this were what investors wanted to hear Wednesday, said Stephen Beck, founder and managing partner of consultancy cg42.
“Tesla investors were worried that Musk wasn’t focused,” Beck told Insider. “His presence and projection of confidence relative to the performance of Tesla – and the numbers being strong on top of it – put a lot of investors at ease.”
Tesla’s long-term strategy satisfies investors
In addition to strong results, Musk presented investors with a rosy picture for the year ahead, including a goal of building between 1.8 million and 2 million vehicles in 2023 thanks to new production capacity in Nevada and Texas.
The CEO also promised more on the company’s strategic vision at an investor day on March 1.
This news was “exactly what the bulls wanted to hear,” Wedbush analyst Dan Ives wrote in a note, “and the bears (for now) will go back into hibernation mode.”
The planned investor day is a welcome chance for Tesla to update shareholders on plans for new platforms as well as expansion plans and improvements to production. It’s also likely a chance for Tesla to goose its stock price, which lost 65% of its value in 2022, largely due to Musk’s acquisition of Twitter.
But investors left the earnings call yesterday reassured that Musk can manage both companies at once, said Darrell Martin, CEO of Apex Trader Funding.
“In a year when we’re expecting a recession, for the company to come out of the gate like this with strong earnings and a plan for how to move forward through a tough environment with affordability – that’s just huge,” Martin said.