Ross Gerber, the president and CEO of Gerber Kawasaki Wealth and Investment Management and a Tesla Inc TSLA bull and investor, on Monday, said that there is a need to address why earnings are falling for the EV giant despite higher sales.
What Happened: “We’re selling Cybertrucks left and right. This should be a rally period for Tesla,” Gerber said in an interview with Last Call CNBC. The company is selling more vehicles in number and also more incredible vehicles but the earnings, and subsequently the stock, is going down, he noted.
“Everything should be going right for $TSLA but earnings are going down… that needs to be addressed,” he said.
Ross reflected that investors were evaluating Tesla as more of a hardware company than a software company as it is resorting to all the tactics that automakers generally use to boost sales amidst intense competition in China. Further, the company has not succeeded in its attempts to achieve autonomous driving, which Gerber deems necessary to add value to the company.
“Those are the brand levers that gave Tesla a premium and between Elon’s behaviors and a lack of completion to a lot of these projects Tesla is just coming down to Earth to a more reasonable valuation,” Gerber said. The current valuation, however, is where it should be, he added.
Why It Matters: Tesla shares crashed over 7% on Monday at $188.14 after China Passenger Car Association data showed a decline in Tesla vehicle sales in the Asian country for February.
Tesla sold 60,365 electric vehicles made in China in February, representing an 18.87% decrease year-over-year and a 15.51% decrease from 71,447 in January.
The stock is down nearly 24% year-to-date.
For 2023, Tesla delivered over 1.8 million vehicles, higher than the 1.3 million it delivered the year before. However, adjusted EBITDA last year fell 13% to $16.63 billion.
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