Tesla Inc (TSLA.O) shares started 2023 where they left off last year, plunging by about 13% on Tuesday on growing worries about weakening demand and logistical problems that have hampered deliveries for the world’s most valuable automaker.
(Copied from Reuters)
Once worth more than $1 trillion, Tesla lost more than 65% in market value in a tumultuous 2022. Tuesday’s slide knocked nearly $50 billion in market value off of Tesla, roughly equal to the valuation of rival Ford Motor Co (F.N), which last year sold three times as many cars as Tesla.
The selloff came after Tesla missed estimates for fourth-quarter deliveries despite shipping a record number of vehicles. Tuesday’s decline made it the worst S&P 500 performer for the day.
Several Wall Street analysts said they expected more pressure on the stock in coming months as it faces stiffer competition from other automakers and weaker global demand.
At least four brokerages cut their price targets and earnings estimates on Tuesday, pointing to the deliveries miss and Tesla’s decision to offer more incentives to boost demand in China and the United States, the two largest global auto markets.
“Demand overall is starting to crack a bit for Tesla and the company will need to adjust and cut prices more especially in China, which remains the key to the growth story,” Wedbush Securities analyst Dan Ives said.
Global automakers have in the past few months battled a demand downturn in China, the world’s number one auto market, where the spread of COVID-19 has hit economic growth and consumer spending.
Tesla is offering hefty discounts there, as well as a subsidy for insurance costs.
The electric-vehicle maker’s performance in 2022 was among the worst in the benchmark S&P 500 index. Tesla’s shares last traded at $107.11, and its market value has declined by about $400 billion since Chief Executive Elon Musk secured financing to buy social media firm Twitter.
Worth about $340 billion now, Tesla is still the world’s most valuable automaker, even though its production is a fraction of rivals such as Toyota Motor Corp (7203.T).
Tesla delivered 405,278 vehicles in the fourth quarter, short of analysts’ estimates of 431,117, according to Refinitiv. For all of 2022, its deliveries rose by 40%, missing Musk’s 50% annual target.
The result “came at the cost of higher incentives, suggesting lower pricing and margin,” brokerage J.P.Morgan said in a note, lowering its price target by $25 to $125.
The shortfall highlighted the logistics hurdles facing a company, which is known for its end-of-quarter delivery rush. The gap between production and deliveries has widened to 34,000 vehicles as more cars got stuck in transit.
The automaker also plans to run a reduced production schedule in January at its Shanghai plant, extending the lowered output it began in December into 2023, Reuters reported.
