Home > Tesla drops 10% after Q4 earnings as Wall Street retreats- Market update

Tesla drops 10% after Q4 earnings as Wall Street retreats- Market update

  • Wall Street retreats after GDP data.

  • Tesla stock plummets 10% after CEO Elon Musk confirms delays in the production of key vehicle models.

US stocks retreated on Thursday afternoon after opening higher following the release of economic data showing the US economy expanded more than expected in the fourth quarter of 2021.

According to the data, the US gross domestic product (GDP) grew 6.9% in Q4 to outpace the 5.5% estimated and the 2.3% recorded in the third quarter.

The Dow Jones Industrial Average closed 0.02% lower, while the Nasdaq lost 1.4% and the S&P 500 fell 0.54%. The Russell 2000 slipped 2.18%.

Going into Friday’s session, weekly performances for the indexes have the Dow down 0.3%, S&P 500 down 1.6%, and the Nasdaq composite off by 3%.

The declines have erased Wednesday’s gains that followed the US Federal Reserve’s two-day meeting, with volatility continuing to dictate movement across the major indexes. The Fed indicated the need for rate hikes, likely to come in March as priced in by the market. The central bank also reiterated its decision to pursue a tightening cycle.

The negative action on Wall Street comes in a week that has seen major companies report upbeat earnings for the fourth quarter. But it also saw misses and disappointing guidance from a few.

Among those to better analysts' estimates were Comcast (CMCSA), Intel (INTC), and Tesla (TSLA). 

However, Tesla’s shares tanked Thursday (as we see below) after revealing delays in production. McDonald’s (MCD) shares also fell after the company missed Q4 earnings estimates.

Apple Inc. (AAPL) reports after the closing bell.

Tesla (NASDAQ:TSLA) slip 10%

Tesla shares dropped by more than 10% on Thursday following its fourth-quarter earnings results, with investor sentiment for the tech stock likely dampened after a major revelation from the carmaker’s CEO Elon Musk.

Tesla’s Q4 earnings beat analyst expectations, with revenue over the quarter coming in at $17.7 billion against Wall Street's estimate of $16.6 billion. The company reported adjusted earnings of $2.54 per share, compared to $2.38 expected.

The electric vehicle company revealed that it expected annual growth to maintain the 50% or more pace for the year. Tesla's gross margin, according to DVx CEO Jon McNeill, puts the company far ahead of rivals Ford and General Motors in terms of cash flow.

However, the report that production for the highly anticipated Cybertruck and Semi truck would be delayed looks to have spooked some investors and invited sell-off pressure.

But Goldman Sachs said in a note that Tesla’s strong revenue meant it was in a good position to continue on its growth trajectory. Analysts at the banking giant assign a “buy” rating for the stock and reiterate the $1,200 price target.

While analysts at JPMorgan and Wedbush also remain upbeat on the Tesla stock, today’s slump has pushed prices to $840. Tesla shares are down 16% over the past five days and more than 30% year-to-date.

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