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Business News/ Markets / Stock Markets/  Tesla shares correct over 15% in 30 days despite positive Q4 numbers; should you buy the dip?
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Tesla shares correct over 15% in 30 days despite positive Q4 numbers; should you buy the dip?

Tesla's services segment grew 37 per cent sequentially, whereas the energy and storage segment surged by 54 per cent in the quarter under review.

Shares of Tesla have corrected over 15 per cent in the last 30 days. (AP)Premium
Shares of Tesla have corrected over 15 per cent in the last 30 days. (AP)

Shares of electric vehicle (EV) major Tesla have corrected more than 15 per cent in the last 30 days, despite positive performance in the October-December period (Q4). The company's services segment grew 37 per cent sequentially, whereas the energy and storage segment surged by 54 per cent in the quarter under review. 

Yet, shares of billionaire Elon Musk-led firm have underperformed and corrected 34.16 per cent year-to-date, according to Trading.biz analyst Rahul Nambiampurath. On Tuesday, shares of Tesla were last trading 0.89 per cent lower at $172.25 against a previous close of $173.80 on the Nasdaq.

Also Read: Mint Primer | Tesla at 40 lakh: Will EVs now come roaring in?

According to the analyst, Tesla’s year-on-year profits for 2023 have declined by 23 per cent, which is one of the primary reasons for the stock’s underperformance. These lacklustre figures have also impacted overall earnings and per-vehicle profitability, believes the analyst.

Tesla Q4 performance

Tesla's net income more than doubled last quarter thanks to a big one-time tax benefit, but it warned of "notably lower" sales growth this year. The Texas-based company said that its net income was $7.93 billion from October through December, compared with $3.69 billion a year earlier.

Tesla reported quarterly revenue of $25.17 billion, up three per cent from a year earlier but was below Wall Street estimates. The firm's profits were off because Tesla lowered prices worldwide through the year in an effort to boost its sales and market share.

Tesla's fourth-quarter sales rose by almost 20 per cent, boosted by steep price cuts in the US and worldwide through the year. Some cuts amounted to $20,000 on higher-priced models, according to official data.

For the full year, its sales rose 37.7 per cent, short of the 50 per cent growth rate that CEO Elon Musk predicted in most years. The company reported deliveries of 484,507 for the quarter and roughly 1.8 million for the full year.

Should you buy Tesla shares?

Tesla’s underperformance has been good news for some of its immediate competitors, like General Motors (GM), which is up 12.87 per cent year-to-date. Tesla’s shares have also triggered a sell-off in several top funds. 

Tesla breached the lower trendline at nearly $231, dipping to $161. It is currently trading over $163.57, lower than the key trendline. ‘’At present, the only critical support exists at $159.5. If this level is breached, we can expect TSLA to correct further, even towards the $107 mark,'' said the analyst.

Also Read: Elon Musk's wealth plunges by $40 billion in 2024 as Tesla shares crash 30% YTD on poor sales

The hidden positive relative strength index (RSI) divergence on the stock is a good sign according to the analyst, with the price action making lower lows and the RSI forming higher lows, signifying weakening bearish momentum. Nambiampurath expects sideways momentum for a while before Tesla releases the Q1 2024 earnings report in April 2024.

The Trading.biz analyst believes the sharp price correction might be good news for value buyers, as key analysts are still bullish on Tesla. For instance, Adam Jones, Lead Operations Associate at Morgan Stanley, maintains a price target of $380 for Tesla.

 

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

 

 

 

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ABOUT THE AUTHOR
Nikita Prasad
Nikita covers business news and has been producing news on digital platforms since 2018. She writes on economy, policy, markets, commodities, industry. Her core areas of interests include infrastructure, energy, oil and gas, railways, and transport/mobility. She has worked for business news channels like Moneycontrol, NDTV Profit, and Financial Express in the past. If you have story ideas/pitches/reports or quotes/views to share, reach her at nikita.prasad@htdigital.in.
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Published: 19 Mar 2024, 09:24 PM IST
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