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As the post-earnings breakdowns on Tesla (NASDAQ:TSLA) continue to pour in, Deepwater Asset Management’s Gene Munster and Brian Barker outlined a key reason that Tesla (TSLA) may have pointed to a “notable” slowdown in unit volume growth this year. The analysts said the Osborne Effect may be in play.
The Osborne Effect is roughly defined as a social phenomenon of customers canceling or deferring orders for the current products due to the announcement official or unofficial buzz over a future product that may compare favorably. The Osborne effect is considered a form of sales cannibalization by a company as it sets its product strategy.
Munster said that since Tesla (TSLA) let the cat out of the bag that a new cheaper vehicle ($25K to $30K) is on the horizon, it made sense that management lowered their growth outlook for 2024 in anticipation of the potential Osborne Effect on Model 3 demand. Notably, the outlook from TSLA did not include many details on gross margin, Opex or CapEx expectations as well. While Munster thinks the Tesla (TSLA) growth story will take off again in the second half of 2025, he warned that the near-term could see some underwhelming deliveries marks for the EV giant and a sluggish share price reaction to the dark phase.
“Coming into the quarterly report, consensus expectations were for 19% growth this year, in line with last year. After a day of analysts’ revisions, the Street now expects about 13% top line growth in 2024. My sense is growth this year will finish at 10%, suggesting there is still some downside to current estimates; as the first quarter progresses, those estimates will drift lower and by mid-year sell side model growth rates will be right-sized.”
As it stands now, the consensus expectation is that Tesla (TSLA) generates revenue of $110.5B and EPS of $3.26 in 2024. The consensus marks for 2025 are for revenue of $137.8B and EPS of $4.54.
Looking further down the road, Munster thinks Tesla’s (TSLA) growth rate will be close to 30% in 2026 and margin rates will be back over 20%. Those estimates suggest that Tesla (TSLA) would be in a dominant position on the earnings front.
