Tesla (TSLA) shares experienced a rise in extended trading on Wednesday, fueled by optimism regarding the automaker’s self-driving capabilities, despite the fourth-quarter results falling short of Wall Street expectations. CEO Elon Musk informed investors during the earnings call that substantial progress has been made with the company’s full self-driving technology. He announced plans to commence using an unsupervised version of the self-driving software at Tesla’s Austin, Texas factory starting in June, with the potential for a broader public release within the year.
The automaker expects a return to growth in vehicle sales after a decline in 2024, marking the first such decrease in sales history. Tesla also confirmed its plans for a more affordable model, anticipated to enter production in the first half of the year, yet details regarding the model’s features and pricing remain undisclosed.
In after-hours trading, Tesla shares rose 4% to approximately $405 following a more than 2% decline in regular trading hours. Over the past year, the stock has more than doubled in value, significantly increasing since November’s presidential election, amid expectations that Musk’s ties with President Donald Trump might yield advantages for the company.
Analyzing Tesla’s stock performance
Since reaching a record high last month, Tesla shares have consolidated within a flag pattern, a bullish chart formation indicating a temporary pause before a potential upward movement. Analysts anticipate the stock may gap above the flag’s upper trendline, which could signal a resumption of its upward momentum. An increase in trading volume is expected as the current flag pattern has seen a steady decline in volume.
Utilizing the bars pattern tool for stock prediction, investors can project a bullish target, placing it at around $790. This target reflects a potential doubling of the closing price from Wednesday and is derived from a historical trending move between October and December.
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As for support levels, investors should monitor the $360 mark, where shares could find initial support near two minor peaks formed in November. A drop below this level may lead to a decline towards $300, an area likely to attract buying interest due to its proximity to a significant psychological level and the July 2023 swing high, which had been the record high until last November’s election-driven breakout. Should selling continue, the stock could further decrease to around $265, a level where shares may be accumulated as it coincides with support from the upward sloping 200-day moving average and a pivotal trendline reaching back to October 2023.
Despite a decline in quarterly profits, Tesla shares showed resilience, rising 3.6% in Frankfurt trading on Thursday. The company reported a profit of $2.3 billion for the final quarter of 2024, a steep drop from $7.9 billion the previous year. Notably, 2023’s profit included a one-time tax benefit of $5.9 billion. The operating profit decreased by 23% in the final quarter when excluding this special gain.
Overall revenue for the fourth quarter was $25.7 billion, showing a 2% increase from $25.2 billion in the same quarter of 2023. For the full year, Tesla’s profit fell to $7.1 billion, down from $15 billion in 2023, though sales rose to $97.7 billion from $96.8 billion.
The company remains heavily reliant on the Model 3 sedan and Model Y SUV for most of its sales, while facing increasing competition from rivals in Asia, Europe, and the United States. BYD has emerged as Tesla’s biggest competitor outside the U.S., offering a diverse range of electric and hybrid vehicles. Analysts predict that over 60 new models from Chinese automakers will be introduced in the second quarter of this year, further intensifying competition.
Tesla reported selling 1.8 million vehicles globally in 2024, a slight decline from the previous year. This marks a significant shift for a company that saw sales increases of 38% and 40% in 2023 and 2022, respectively. In the U.S. market, Tesla’s share of electric vehicle sales dropped to 44% in the last quarter of 2024, down from 51% the previous year, revealing a loss of ground in the luxury market as well.
Sales of the Cybertruck, starting at about $80,000, have also declined, with 13,000 units sold in the fourth quarter, down from 16,700 in the third quarter. To maintain sales, Tesla has implemented price cuts and introduced low-interest financing options, although these strategies have negatively impacted profit margins.
Despite the downturn in financial performance, Tesla’s stock price has surged since November. Investors are focusing on Musk’s commitments to the self-driving “cybercab” project, which he claims could lead to substantial revenue opportunities. The company indicated plans to start launching this service later in the year in the U.S.
Some analysts suggest that Tesla’s stock price is currently detached from its fundamentals, attributing the increase to “Elon’s star power” and the company’s potential role as a market disruptor. Additionally, there are expectations that Musk’s relationship with President Trump could facilitate the removal of regulatory barriers for self-driving vehicles, even amidst promises from Trump and Republican lawmakers to cut tax credits and incentives for electric vehicles.
Tesla intends to introduce a new, lower-cost vehicle this year, which may attract a broader customer base. However, specifics about this model have yet to be announced.
Disclaimer: The content of this article is for informational purposes only and should not be construed as investment advice. We do not endorse any specific investment strategies or make recommendations regarding the purchase or sale of any securities.
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