Tesla's weak prospects disappoint the public, analysts argue: it's mostly the "Osborne effect" at play.
Tesla announced fourth-quarter earnings that fell short of expectations, while also warning that delivery growth in 2024 may be significantly lower than in 2023. Gene Munster and Brian Barker from Deepwater Asset Management pointed out that the slowdown in Tesla's sales growth this year could be attributed to the "Osborne effect." They stated that Tesla has revealed plans to launch a more affordable new model, which justifies the downward adjustment in growth expectations for 2024. Although Tesla's outlook did not include more details, Munster believes that Tesla's growth story will resume in the second half of 2025. Currently, the market generally expects Tesla's revenue in 2024 to be $110.5 billion, with earnings per share of $3.26.
Zhitong App has learned that recently, Tesla announced lower-than-expected fourth-quarter earnings and warned that the growth rate of deliveries in 2024 may be significantly lower than in 2023. In response to this, Gene Munster and Brian Barker from Deepwater Asset Management outlined the key reasons for the "significant" slowdown in Tesla's sales growth this year. They believe that the "Osborne effect" may be at play.
The Osborne effect refers to the high expectations that future product specifications and prices can create among consumers, thereby significantly impacting the sales of current products.
Munster stated that it makes sense for Tesla's management to lower their growth expectations for 2024, as the upcoming launch of a more affordable new model (priced at $25,000 to $30,000) is expected to be affected by the Osborne effect. However, it is worth noting that Tesla's outlook does not include more details on gross margins, operating costs, or capital expenditure expectations.
While Munster believes that Tesla's growth story will unfold again in the second half of 2025, he warns that in the short term, the delivery volume of this electric vehicle giant may be mediocre, and the stock price may also have a subdued reaction to this phase.
"Before the quarterly report was released, the market generally expected a revenue growth rate of 19% for this year, which is on par with last year. After a day of analyst revisions, Wall Street currently expects a revenue growth rate of about 13% for 2024. My expectation is that the growth rate for this year will reach 10%, indicating that the current forecasts still have some downside potential; as the first quarter progresses, these forecasts are expected to be revised downward, and by mid-year, the growth rate estimates in sell-side models will reach an appropriate level."
Currently, the market generally expects Tesla's revenue for 2024 to be $110.5 billion, with earnings per share of $3.26. Revenue expectations for 2025 are $137.8 billion, with earnings per share of $4.54.
Looking ahead, Munster believes that by 2026, Tesla's growth rate will approach 30% and the profit margin will rise to over 20%. These estimates indicate that Tesla will dominate in terms of profitability.