Tesla stock falls after company reports first profit miss in more than a year

The company earned $270 million, or 24 cents a share, in the fourth quarter, compared with earnings of $105 million, or 11 cents a share, in the year-ago quarter. Adjusted for one-time items, the Silicon Valley car maker earned 80 cents a share.

Revenue rose 46% to $10.74 billion from $7.38 billion a year ago, thanks in part to “substantial growth” in deliveries but offset by extra costs, the company said.

Analysts polled by FactSet expected Tesla to report adjusted earnings of $1.02 a share on sales of $10.47 billion.

With new vehicles, new factories and ramped-up production on the horizon, “2021 is going to be a great year for Tesla,” Chief Executive Elon Musk said in a conference call with analysts after the results. “So I’m super excited about the future, and we look forward to making it happen.”

He later said he expects to remain CEO for several more years.

Up until now, Tesla had topped analyst forecasts every quarterly reporting day since October 2019, when it earned a surprise third-quarter 2019 profit against Wall Street expectations of a loss. 2020 marked the first full year of profitability for the company.

Tesla’s miss “was driven by weaker-than-expected margins,” analyst Garrett Nelson with CFRA said. Investors also viewed the lack of a direct 2021 sales guidance as a negative, he said.

In the call with analysts, Musk attempted to justify Tesla’s skyrocketing market capitalization, currently north of $820 billion, by pegging it to the company’s suite of self-driving features and software.

Fully self-driving Teslas could be used as “robo-taxis,” generating income for their owners in the future, he said.

Musk also said Tesla plans to offer the self-driving capabilities as a subscription in the near future, and that the company is “open” to considering licensing the software to other car makers.

In the letter to investors, Tesla shied away from providing a straightforward sales outlook. Instead, it said it had “simplified our approach to guidance” this year in order to focus on longer-term goals.

Musk “probably chose to be less specific given various uncertainties,” including those that are pandemic-related, CFRA’s Nelson said. Moreover, without a specific target for the year, Tesla gives itself more flexibility and set itself up for “underpromising so they can overdeliver.”

In a letter to shareholders, Tesla said it planned to grow its manufacturing capacity “as quickly as possible,” and as far as deliveries, its proxy for sales, it expects to reach a 50% average annual growth over a “multi-year horizon.”

“In some years we may grow faster, which we expect to be the case in 2021,” Tesla said in the letter, which executive reiterated in the call.

A growth right at 50% would mean the delivery of about 750,000 vehicles this year, which would compare with the nearly 500,000 cars delivered in 2020, a year marred by factory stoppages and delays due to the pandemic.

The FactSet surveyed analysts expect deliveries around 800,000 vehicles for this year.

Tesla’s average selling price of its vehicles fell 11% year-on-year as its mix continued to shift to the cheaper Model 3 and Model Y from its luxury Model S and Model X vehicles, the company said in the letter to shareholders. Tesla executives reiterated in the call that the change will continue to be headwind.

The company said it remained on track to start vehicle production at its new factories in Germany and Texas this year, with in-house battery cells. It is also on track to start selling its commercial truck, the Semi, by the end of the year.

In the call, Musk said he expects to deliver the Cybertruck, Tesla’s pickup truck, by the end of this year “if we get lucky” and after some design fixes. Volume production, however, is slated for 2022, he said.

Tesla shares have gained nearly 700% in the past 12 months, compared with gains around 17% for the S&P 500 index SPX, -2.57%. Earlier this year, the stock went on its longest-ever winning run.