be warned

Texas-based EV giant foresees profit crunch amid price drops, slowing growth

Tesla warned that sales growth this year may be “notably lower” than the 2023 growth rate, as it works to launch a more affordable next-generation vehicle at a factory near Austin. Photo courtesy of Tesla

Shares of Tesla tumbled at the opening bell Thursday as the electric vehicle, solar panel and battery maker warned investors of slower sales growth this year after posting fourth-quarter results that were weaker than most had expected.

In a letter to shareholders released Wednesday, Tesla warned that sales growth this year may be “notably lower” than the 2023 growth rate, as it works to launch a more affordable next-generation vehicle at a factory near Austin.

Tesla, the letter said, is between two big growth waves, one from global expansion of the Models 3 and Y, and a second coming from the new vehicle.

The company, which is headed by billionaire Elon Musk, reported a fourth-quarter adjusted profit of 71 cents per share on revenue of $25.17 billion. Analysts polled by FactSet predicted a profit of 73 cents per share. Revenue was expected to be $25.64 billion.

Profits were off because Tesla lowered prices worldwide through the year in an effort to boost its sales and market share.

Shares slid more than 9 percent in Thursday morning trading.

Wedbush's Dan Ives said in a client note that Tesla's conference call on Wednesday to go over its financial results left many frustrated.

“Consistent with last quarter’s call, investors wanted to get their arms around the falling margins and constant, never ending price cuts seen globally, but instead, we heard from a much more cautious Musk who focused on production, next-gen vehicle timelines, and FSD/AI investments where much of the larger Tesla story was talked about instead of concrete guidance,” Ives wrote.

Still, the analyst remains optimistic on Tesla, believing that electric vehicle adoption to a broader mass market is near. However, Ives concedes there are still challenges to contend with.

“This is a pivotal period for Musk to get Tesla through that will help shape (or haunt) its EV future," he said.

Jeffrey Osborne of TD Cowen said that in the short term, it will be hard for EV competitors to catch up to Tesla as the company focuses on electrical efficiency and investing in battery technology. However, the analyst said there is “a great deal” of production-related risk in coming quarters that could possibly pressure margins and the stock as Tesla ramps up new plants in Germany and Texas and new vehicles.

A year ago, Tesla announced its plans to expand its Texas facility.

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A View From HETI

Devon Energy will buy Houston-based Coterra Energy. Photo via Coterra Energy

Oklahoma City, Oklahoma-based Devon Energy has agreed to buy Houston-based Coterra Energy in a $21.5 billion all-stock deal, forming an energy powerhouse that will be headquartered in Houston. The combined company, boasting an enterprise value of $58 billion, will adopt the Devon brand name.

Revenue for the two publicly traded companies totaled nearly $18.8 billion in the first nine months of 2025. Devon is a Fortune 500 company, but Coterra doesn’t appear in the most recent ranking.

The deal, already approved by the boards of both companies, is expected to close in the second quarter of 2026. Once the transaction is completed, Devon shareholders will own about 54 percent of the combined company and Coterra shareholders will own 46 percent.

“This transformative merger combines two companies with proud histories and cultures of operational excellence, creating a premier shale operator,” says Clay Gaspar, Devon’s president and CEO.

The combined company will be one of the world’s largest shale producers, with third-quarter 2025 production exceeding 550 thousand barrels of oil per day and 4.3 billion cubic feet of gas per day. A significant presence in the Delaware Basin, encompassing hundreds of thousands of acres, will anchor the company’s operations. The 10,000-square-mile Delaware Basin is in West Texas and southeastern New Mexico.

The new Devon also will operate in the Permian Basin, located in West Texas and New Mexico; Marcellus Shale, located in five states in the East; and Anadarko Basin, located in the Texas Panhandle, Colorado, Kansas, and Oklahoma.

Gaspar will be president and CEO of the combined company, and Tom Jorden, chairman, president, and CEO of Coterra, will be non-executive chairman.

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