Tesla Stock (NASDAQ:TSLA) Rises Despite Missing Q4 Estimates
January 31, 2025 – Tesla (TSLA) reported disappointing fourth-quarter results, missing revenue and earnings estimates as vehicle deliveries slowed and margins remained under pressure. Still, the stock initially fell after earnings but then quickly rebounded to be slightly up.
Earnings Miss Sparks Investor Concerns
Tesla's Q4 2024 revenue came in at $25.71 billion, falling short of analyst expectations of $27.21 billion (Bloomberg estimates). This marked only a 2% year-over-year increase, highlighting the company's slowing growth amid intensifying competition and economic headwinds.
On the profitability front, Tesla posted an adjusted EPS of $0.73, slightly below expectations of $0.77, while operating income declined 23% year-over-year to $1.58 billion, significantly missing Wall Street’s $2.68 billion estimate.
Tesla attributed the lower profitability to increased AI and research & development (R&D) costs, as well as a decline in the average selling price (ASP) of its vehicles.
For the full year 2024:
Revenue totaled $77.07 billion
Adjusted net income was $8.419 billion, a 23% drop compared to 2023
Vehicle Deliveries Fall Short, First Annual Decline
Earlier this month, Tesla reported that it delivered 495,930 vehicles in Q4, missing estimates of 510,400 (Bloomberg). This was an improvement over the 463,000 deliveries in Q3 but only slightly higher than 484,500 in Q4 2023.
For the full year, Tesla delivered 1.78 million vehicles, falling short of analyst expectations for 1.8 million. More importantly, this marked Tesla’s first-ever year-over-year decline in annual deliveries, signaling potential demand challenges as competition from legacy automakers and new EV entrants intensifies.
Despite the slowdown, Tesla reiterated that new, more affordable models are on track for production in early 2025, while its purpose-built robotaxi, the Cybercab, is set for volume production in 2026.
Margins Under Pressure, But Energy Business Shines
Tesla's operating margin declined to 6.2% in Q4, down from 16% a year ago, due to:
Lower ASPs for its vehicles amid price cuts and financing incentives
Higher R&D and AI investment costs
Increased spending on production expansion and future models
However, Tesla’s energy storage business was a bright spot, with deployments expected to grow by 50% year-over-year. The company recently completed its Megafactory in Shanghai, which will start ramping production this quarter.
Production Capacity and Future Plans
Tesla provided updates on its global manufacturing footprint:
Model Y production has surpassed 550,000 units in California and 950,000 in Shanghai
Cybertruck production capacity is expected to reach 125,000 units annually
Tesla Semi production remains in pilot phase, with a factory in Nevada expected to ramp in 2025
Cybercab is still in development with production set for 2026
Tesla also confirmed that FSD (Full-Self Driving) Supervised is expected to launch in Europe and China in 2025, while robotaxi fleet testing will begin in the U.S. later this year.
Valuation: What Is TSLA’s P/E Ratio Now?
In the last year, TSLA generated $2.42 in adjusted EPS. At the current share price of $404, this gives it a P/E ratio of 166.9x.
You can use our free valuation calculators to help you determine if TSLA stock is undervalued or overvalued.
A useful one you can use is our H-model calculator, which we’ve provided for free below. And if you don’t know how to use it, a comprehensive guide can be found here.
