Tesla: Largest revenue decline since 2012 – but shares surge

Following the release of its earnings report, Tesla (TSLA:US) witnessed a 13.3% surge in after-hours trading on Tuesday 23rd April.

Despite falling short on revenue expectations for the first quarter of 2024, experiencing a substantial profit decrease, and grappling with a recall of its latest flagship vehicle, the $100,000 Cybertruck, Tesla remained resilient.

The electric vehicle giant reported $21.3 billion in revenue, slightly lower than the estimated $21.48 billion, marking a significant 9% year-over-year drop — the largest since 2012. Profit amounted to $1.1 billion, representing a stark 55% decline from the same period in 2023.

Nevertheless, the earnings report provided encouraging updates for investors, including previews of an upcoming ride-hailing app integration into Tesla products, accelerated timelines for new vehicle models, and progress on a robotaxi network. Notably, Tesla has substantially increased its investment in AI infrastructure, doubling its AI compute capabilities in the past three months.

The earnings call marked Tesla's first since the Cybertruck recall, addressing concerns over malfunctions and reaffirming commitment to product quality. Despite these challenges, Tesla has been navigating a tough year, marked by global workforce reductions and price cuts in response to competitive pressures.

Even prior to the Cybertruck issues, Tesla confronted significant challenges throughout the year. Just last week, the company announced a global staff reduction of 10%, equating to approximately 14,000 job cuts. Additionally, over the weekend, Tesla implemented price cuts across its product lineup worldwide. Amidst this, Tesla has navigated a string of disappointing earnings reports in recent quarters, compounded by the emergence of Chinese electric vehicle competitors in the market.

In the last quarter, Tesla experienced a decline in vehicle deliveries for the first time in four years. Furthermore, in the latest report released on Tuesday, Tesla acknowledged that its vehicle volume growth rate may fall notably short of the rate achieved in 2023.

Elon Musk has also faced criticism from investors, who argue that his attention is spread too thin following his acquisition of Twitter, rebranded as X, in late 2022. The company and its products have faced upheaval in the subsequent year and a half. Meanwhile, Tesla has sought shareholder approval for Musk's $56 billion compensation package, which was previously rejected by a judge earlier this year as an "unfathomable sum."

Addressing these concerns during the earnings call, Musk emphasised his unwavering commitment to Tesla's success, stating, "Tesla constitutes the majority of my work time. I work every day of the week. I’m going to make sure Tesla is very prosperous."

 

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