Tesla shares suffer New Year’s hangover on demand worries, delivery issues

  • The stock is the first loser in the S&P 500 on the first trading day of 2023
  • Selloff removes $50 billion from market capitalization
  • Tesla misses fourth-quarter vehicle delivery estimate
  • The electric vehicle company is still the world’s most valuable automaker

Jan 3 (Reuters) – Tesla Inc. (TSLA.O) Stocks kicked off 2023 with a thud, plunging more than 12% on Tuesday on growing worries about weakening demand and logistical issues that have hampered deliveries from the world’s most valuable automaker.

Once worth more than $1 trillion, Tesla has lost more than 65% of its market value in a tumultuous 2022 that has seen it increasingly challenged by other automakers and facing trouble. production resulting from COVID lockdowns in China.

Tuesday’s slide knocked nearly $50 billion in market value, roughly equal to the valuation of rival Ford Motor Co. (FN)which sold three times as many cars last year as Tesla.

The sale came after Tesla missed market expectations for fourth-quarter deliveries despite shipping a record number of vehicles.

Reuters Charts

“Tesla, as it grows, is now entering a phase of still solid but slower growth,” said Morningstar analyst Seth Goldstein. As a major car producer, it “is likely to feel the impact of an economic downturn more,” he added.

Several Wall Street analysts have said they expect increased pressure on the stock in the coming months due to growing competition and weaker global demand.

Global automakers have struggled in recent months with falling demand in China, the world’s top auto market where the spread of COVID-19 has hurt economic growth and consumer spending. Tesla offers significant discounts and a subsidy for insurance costs.

At least four brokers slashed price targets and profit estimates on Tuesday, pointing to missed deliveries and Tesla’s decision to offer more incentives to boost demand in China and the United States, the two biggest markets. global automobiles.

The company’s stock was the worst performer on the benchmark S&P 500 index (.SPX) Tuesday as it fell to $104.64 per share – the lowest since August 2020. More than 220 million shares traded hands during normal trading hours.

The electric vehicle maker’s performance in 2022 was among the worst in the S&P 500 index.

Members of the media and guests surround the Tesla Model Y and Model 3 during Thailand Tesla’s official launch event in Bangkok, Thailand December 7, 2022. REUTERS/Athit Perawongmetha

“You have so many things working against the stock. One is obviously Musk’s involvement with Twitter,” said Dennis Dick, market structure analyst and trader at Triple D Trading.

Tesla’s market value has shrunk by around $370 billion since chief executive Elon Musk reached the deal to buy social media company Twitter.

Part of that decline came from its stock sale to fund the $44 billion deal, while the stock also fell on investor concerns that Musk was distracted by the social media company.

Worth around $341 billion, Tesla is still the world’s most valuable automaker, even though its output is a fraction of that of rivals such as Toyota Motor Corp. (7203.T).

Tesla shares biggest loser among Big Tech Tesla shares biggest loser among Big Tech since April

Tesla delivered 405,278 vehicles in the fourth quarter, below analysts’ estimates of 431,117. For all of 2022, its deliveries rose 40%, missing Musk’s 50% annual target.

The result “came at the cost of higher incentives, suggesting lower pricing and margin,” brokerage firm JPMorgan said in a note, lowering its price target from $25 to $125.

The median price target of 41 analysts on the stock was $250, more than double the current price, according to data from Refinitiv. The lowest price is $85, from Roth Capital Partners.

The revenue shortfall highlighted the logistical hurdles facing the company, known for its rush to end-of-quarter deliveries. The gap between production and deliveries widened to 34,000 vehicles as more cars got stuck in transit.

The automaker plans to run a reduced production schedule in January at its Shanghai plant, extending the reduced production it started in December until 2023, Reuters reported.

Meanwhile, California-based electric vehicle maker Rivian Automotive Inc. (RIVN.O) narrowly missed its 2022 production target of 25,000 units.

Reuters Charts

Reporting by Aditya Soni, Eva Mathews and Akash Sriram in Bengaluru; Additional reporting by Amruta Khandekar; Editing by Tomasz Janowski, Shounak Dasgupta and Arun Koyyur

Our standards: The Thomson Reuters Trust Principles.

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