Can Tesla stock be headed for correction on growth troubles?

Shares of Tesla (TSLA) are down 10% Thursday morning after warning of slower 2024 growth in its fourth-quarter earnings report. CEO Elon Musk spoke on the conference call about competition with Chinese-made EVs dominating the market, saying: "If there are not trade barriers established they will pretty much demolish most other car companies in the world".

Yahoo Finance Anchors Rachelle Akuffo and Akiko Fujita break down the latest results from Tesla and Musk's comments and what they mean for the company moving forward.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Nicholas Jacobino

Video transcript

RACHELLE AKUFFO: Arguably the biggest story of the day, Tesla, and that stock extending its losses. Currently down almost 11% on the day after the company warned of slower growth in its latest quarterly results. And I'm really interested in Elon Musk's comments on Chinese competition. Let's listen to what he said.

ELON MUSK: The Chinese car companies are the most competitive car companies in the world. Frankly, I think if there are not trade barriers established, they will pretty much demolish most other car companies in the world.

RACHELLE AKUFFO: So when he's talking about competition from some of these Chinese cars, essentially though, what he's talking about is some of these cheaper priced models, and also a range of cars as well, something that he had the opportunity to do. He had the opportunity to come up with a cheaper car.

We're now seeing that potentially coming out in 2025 with this Redwood model. But this was really his crown to lose at this point. And he's actually very lucky at this point that there are those trade barriers that don't allow Chinese EVs to flood the US, as we're seeing that competition in the EU.

AKIKO FUJITA: Yeah, in many ways, Tesla has had what some would argue a first mover advantage for so long, right, in terms of having that brand as we've seen this shift to EVs. But now we're talking about this second phase, if you will, in the transition. And to your point, the Chinese makers really, really giving Tesla a run for its money.

And the question here is when they start to expand beyond their home market of China, how does Tesla go head to head, especially with that pricing? Yesterday, we were talking about that. $25,000 car that Tesla is potentially looking into moving forward here, because that cycle of Model Y's and Model 3's-- Elon Musk essentially said yesterday, things are starting to stall out on that front.

What I think is kind of interesting is looking at Tesla's stock move. We have seen it just get battered on the back of those results yesterday after hours. Today, extending those losses, down about 10.7%. And Rachelle, the question-- this has been the ongoing question for Tesla. Is it a car company? Is it a tech play?

And to me, what's interesting is so many analysts that have come out, before any of the earnings calls, to say this is a tech company. This is an AI robotics company. And yet when you look at this reaction today, it clearly still, in a significant way, trades on the car side of things.

Because AI robotics side simply isn't there. The product isn't there. Elon Musk has all but admitted they are not leading on that. So then what happens to the price of the stock? I mean, today, it is a direct reaction. But you have to wonder long term here what that looks like.

Adam Jonas put out a note initially before the earnings call, which I thought was kind of interesting, breaking down what he thinks is sort of the price, the value of this stock. At $345 a share, which is where he thinks it should be, he thinks Tesla share is worth only $75 comes from selling electric vehicles.

So a bit of a surprising move, you could argue, if that's the breakdown. I mean, not everybody in the market believes that. But this is still moving on the auto side because the AI and robotics bet is still ways ahead.

RACHELLE AKUFFO: No, I mean, and you raise a good point that-- I did think it was interesting in that same note from Jonas, he said that he didn't think that the Tesla-- that 4Q earnings result and the earnings call didn't move the narrative in either direction. But it was the fact that he didn't-- we didn't hear much about anything to alleviate the bearishness, so it's sort of letting that narrative run, continues to fuel this potential negativity.

We're already seeing a slowdown in the EV space. So if you wanted to hear some good news, obviously, that's not what Musk does. He's going to tell it how it is. But that's clearly not what investors were looking for, especially as they see him continue to be distracted by making X the everything app. They really did want to see some signs of growth here and really not getting it.