The earnings report was a stinker. Investors didn’t care.
Shares of Tesla (TSLA 12.06%) were surging today as investors looked past the weak first-quarter earnings report from the leader in electric vehicles (EVs). They were instead swayed by CEO Elon Musk’s insistence that the stock should be valued as an artificial intelligence (AI) and robotics company rather than an auto stock.
Tesla also talked up its push into autonomous vehicles (AVs) and the robotaxi on the earnings call, as well as its upcoming more-affordable EV that some have dubbed the Model 2.
With the stock down sharply this year, the comments were enough to encourage investors to lift the beaten-down stock price, which was up 11.9% as of 11:22 a.m. ET on Wednesday.
The Tesla Cybertruck. Image source: Tesla.
Tesla isn’t turning the corner just yet
Revenue and profits fell in the quarter and missed estimates. After the company reported a 9% decline in deliveries at the beginning of the month, on Tuesday night it told investors that revenue also fell 9% to $21.3 billion, missing the analyst consensus at $22.2 billion. Auto revenue was down 13% to $17.4 billion.
Profit margins plunged as Tesla and its competitors have cut prices substantially over the last year, and its operating margin fell from 11.4% to 5.5%. Adjusted earnings per share came in at $0.45, down from $0.85 and below estimates at $0.51.
Still, Tesla said that its cost of goods sold per unit declined sequentially, excluding its Cybertruck and unscheduled downtime.
The company didn’t give a production forecast but acknowledged that its vehicle volume growth rate “may be lower” than it was in 2023.
Why investors are bidding up Tesla stock
Investors were willing to look past the weak results and instead bet on Musk’s vision of a self-driving future. Tesla said in its shareholder letter that it was between growth waves with the next one expected to be driven by vehicle autonomy and new products like the Optimus robot.
The company has a robotaxi event planned for Aug. 8, though it’s unclear when those autonomous vehicles will hit the market or when its full self-driving technology will be good enough to enable the Uber-like AV ride-sharing marketplace that Musk envisions.
Still, investors are confident enough in the company’s future to give him the benefit of the doubt. It could take years for the self-driving story to play out, but Tesla will continue to earn a premium from investors as long as its autonomous future is credible.
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla and Uber Technologies. The Motley Fool has a disclosure policy.
