What Happened?
Shares of electric vehicle pioneer Tesla (NASDAQ:TSLA) fell 5.1% in the morning session after the company reported underwhelming vehicle deliveries for Q4 2024. Total deliveries were 495,570 for Q4 2024, falling short of the consensus estimate of just under 507,000. Results for the quarter show the first annual drop in delivery numbers for the company, which reported 1.80 million deliveries in 2024 and 1.81 million deliveries in 2023.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Tesla? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Tesla’s shares are extremely volatile and have had 109 moves greater than 2.5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 6 days ago when the stock dropped 4.6% on the news that the major indices declined sharply (Nasdaq down 1.9%, S&P 500 down 1.1%) as investors appeared to be locking in some gains in a year marked by significant progress in the Fed's effort to deliver a soft landing—taming inflation without causing more damage to the economy—despite early signs of weakness in the labor market.
With two more trading days to wrap up the year, investors were hoping for a "Santa Claus Rally." The Nasdaq climbed more than 30% year to date, while the S&P 500 gained over 25%, reflecting the resilience of the U.S. economy. The improved momentum, especially in the second half of the year, was fueled by the ongoing investment in AI within the tech sector, the Fed's continued dovish shift as inflation cooled, enabling the Powell-led committee to deliver three rate cuts (0.5% in September and 0.25% each in November and December).
Additionally, the November 2024 elections sparked optimism for more business-friendly regulations in energy, tech, and industrials following Donald Trump's return to the presidency. Nonetheless, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.
Tesla is up 53.5% since the beginning of the year, but at $381.24 per share, it is still trading 20.6% below its 52-week high of $479.86 from December 2024. Investors who bought $1,000 worth of Tesla’s shares 5 years ago would now be looking at an investment worth $13,291.
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