Tesla is up 8% since its earnings report on Wednesday, despite missing profit and revenue estimates.
JPMorgan criticized Tesla’s valuation, citing a pattern of missed earnings projections.
It said Elon Musk’s bold predictions may have influenced the stock’s rise.
JPMorgan thinks Tesla’s post-earnings stock rally of 8% despite missing analysts’ profit and revenue estimates is a head-scratcher.
The bank, which has long been bearish on Tesla stock, said in a note on Thursday that a 38% miss in earnings before interest and taxes and the lowest profit margin in years were yet another sign that the company is overvalued.
«The move higher in Tesla shares bore no relation whatsoever to the company’s financial performance in the quarter just completed or to its outlook for growth in the coming year,» the analyst Ryan Brinkman said.
Brinkman offered several theories about what drove the stock higher after Tesla’s earnings report, including the sky-high projections CEO Elon Musk made during the earnings call.
«Perhaps it was management’s statement that it had identified an achievable path to becoming worth more than the world’s five most valuable companies taken together,» Brinkman said.
«Or maybe it was management’s belief that just one of its products has by itself the potential to generate ‘north of $10 trillion in revenue,'» he added, referring to a prediction made on the call about Tesla’s Optimus humanoid robot.
But Brinkman isn’t buying what Musk is selling, sticking with his $135 price target, which represents potential downside of 68% from current levels.
Tesla reported its first annual sales decline since selling its first car in 2008. It reported fourth-quarter revenue of $25.7 billion, missing estimates by $1.4 billion, and earnings per share of $0.73, missing estimates by $0.02.
But to Brinkman, the most concerning aspect may have been the guidance for a return to growth in 2025.
Brinkman highlighted that the outlook Tesla provided during its third-quarter earnings call for vehicle deliveries to grow by 20% to 30% in 2025 was moderated to only «a return to growth.»
«This fits into a broader pattern for Tesla shares — the company’s financial performance and Bloomberg consensus for revenue, margin, earnings, and cash flow all keep coming down, but analyst price targets and the company’s share price keep going up,» Brinkman said.
For example, Tesla’s fourth-quarter earnings before interest and taxes of $1.58 billion was 38% below the $2.5 billion Wall Street expected, but 10 quarters ago, analyst consensus for fourth-quarter 2024 EBIT stood at nearly $9 billion, representing an 82% miss from that estimate.
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