The stock market had another day of intraday volatility on Thursday, with early gains evaporating for major market benchmarks. The Dow Jones Industrial Average (^DJI -0.11%) managed to finish within spitting distance of the unchanged mark, but the further down the market capitalization spectrum you go, the worse various indexes fared. The S&P 500 (^GSPC 0.02%) and Nasdaq Composite (^IXIC 0.10%) were successively worse, and small-cap stocks were down more than 2%.
|
Index |
Daily Percentage Change |
Daily Point Change |
|---|---|---|
|
Dow |
(0.02%) |
(7) |
|
S&P 500 |
(0.54%) |
(23) |
|
Nasdaq |
(1.40%) |
(189) |
Data source: Yahoo! Finance.
The news of the day for many was Tesla (TSLA 12.06%) and its earnings report, which prompted a massive drop in its stock price. Yet there was another Nasdaq large-cap stock that fared far worse. Below, we'll look more closely at Tesla's decline and then reveal which stock suffered an even bigger hit.
Is Tesla running out of road?
Shares of Tesla were down more than 11% on Thursday. The electric vehicle pioneer's fourth-quarter financial report included some solid numbers, but shareholders seemed extremely concerned about what the next chapter in the company's evolution will look like.
Image source: Tesla.
Tesla's financial numbers were strong. Fourth-quarter automotive revenue jumped 71% year over year to nearly $16 billion. Gross margin continued to climb, rising almost 6.5 percentage points to 30.6%. That cost discipline helped adjusted net income to triple to $2.88 billion, and adjusted earnings of $2.54 per share were better than expected.
However, investors seemed to focus on the negative aspects of the report. Tesla said that its factories have operated below capacity for several quarters now due to supply chain limitations, and the company believes those problems are likely to continue through 2022. The company didn't offer any specifics on what its 2022 production numbers could look like.
Perhaps worst of all, some reports suggested that Tesla might not come out with any new product announcements over the course of this year. Projects like the Semi commercial truck and the Cybertruck are still in the pipeline, but in particular, hopes for a still-cheaper EV might have to wait longer. For those hoping that Tesla would get closer to achieving its mission of taking over substantial market share from legacy automakers, that wasn't the best news they could have gotten. That's why Tesla stock lost more than $108 per share in a single day, lopping off more than $100 billion from its market capitalization.
Teradyne takes a tumble
Meanwhile, shares of Teradyne (TER 0.85%) were down more than 22%. The specialist in advanced test solutions and industrial automation reported fourth-quarter financial results that were solid, but as with Tesla, shareholders seemed more concerned about what's to come in 2022.
Teradyne's fourth-quarter revenue was up 17% from year-ago levels, closing a year of 19% sales growth. The company's mobile industrial robot segment was particularly strong, seeing sales growth of 46% year over year for the quarter and 42% for 2021 overall. Full-year revenue for Teradyne's universal robots division saw similarly strong growth of 41%.
Teradyne also promised to keep treating shareholders well. It boosted its quarterly dividend by 10% to $0.11 per share, and it said it expects to buy back at least $750 million in stock during 2022.
Yet Teradyne's guidance for first-quarter revenue and earnings fell well below what investors had expected to see. The company blamed a slower pace of transformation among key customers as the semiconductor industry moves toward 3-nanometer chip fabrication processes by 2023.
Both Tesla's and Teradyne's drops show that investors want concrete guidance on what to expect in the future. Good past performance is not enough, and until companies can prove they can keep up their upward trajectory, shareholders will remain skeptical.
