Tesla Inc. Investors Face Worst Month in Years
Shares of Tesla Inc., led by Elon Musk, have plummeted 26% this month, resulting in a loss of $205 billion in market valuation. The stock is currently experiencing its longest losing streak since 2016, with six consecutive weeks of decline. The timing of this decline is significant, as it occurred before the launch of Tesla’s first mass-market car, the Model 3.
Lack of Confidence Spurs Selling Frenzy
Investors are expressing confusion and apprehension regarding Tesla’s forecast and outlook. Adam Sarhan, founder and CEO of 50 Park Investments, believes that there is no immediate support for the stock and questions why investors should remain optimistic if even Tesla is not confident about the future.
Industry Concerns Intensify the Selloff
The automotive industry’s warnings about a decline in demand for electric vehicles (EVs) have further contributed to the selloff. Rental-car giant Hertz Global Holding Inc. recently scaled back its electric vehicle fleet expansion plans, while Ford Motor Co. reported a weaker market for EVs. These announcements have cast a shadow on the future of the EV industry as a whole.
Price Cuts and Earnings Report Spark Worries
Tesla’s decision to institute multiple price cuts has raised concerns about potential margin thinning. In addition, the company’s fourth-quarter earnings report, which predicted a significantly slower expansion rate in 2024 without providing further details, further eroded investor confidence and triggered a significant decline in the stock price.
Analysts Downgrade Stock and Reduce Price Targets
In response to Tesla’s recent developments, multiple analysts have downgraded the stock, with several lowering their price targets as well. The average price target has dropped by almost 8% since Tuesday, and now stands at $220.34, while the stock is currently trading at around $185.
Uncertain Road Ahead
Experts predict that Tesla’s stock could remain volatile for the unforeseeable future due to the company’s reluctance to provide a clear roadmap and the anticipated EV winter that is expected to impact the entire industry throughout the year. The delay in Tesla’s positive inflection point is causing concern, and revenue growth is not expected to accelerate until the second half of 2025.
Potential for Reversal and Bounce Back
Despite the current downward trend, technical signals indicate that Tesla’s stock has reached an “oversold” level, typically indicating an upcoming reversal. Matt Maley, chief market strategist at Miller Tabak + Co., suggests that while the stock may continue to face a decline before reaching its lowest point, the odds of a rebound in the near future are becoming increasingly likely.
Analyst comment
Negative news. Analyst prediction: Tesla’s stock could remain volatile in the short term due to lack of confidence, industry concerns, price cuts, and downgrades. However, technical signals show potential for a reversal and bounce back.
