Tesla shares on track for worst year ever as Elon Musk’s EV giant faces 4 major headwinds

Tesla (TSLA) has been a monster stock for much of its history, particularly in the stratosphere from mid-2019 to late 2021. But in 2022, Tesla shares have suffered a massive loss, down 52% since November 21st. .


That would easily surpass 2016’s 11% decline, the only other annual decline since Tesla’s stock went public in 2010. The sell-off intensified, with the EV giant losing nearly half its value in the past two months. TSLA shares fell 6.8% on Monday, hitting a new two-year low, the S&P 500’s worst performance for the session.

From Elon Musk’s “Twitter circus” to Tesla demand concerns, here are some of the key headwinds facing TSLA stock.

Tesla Stock Annual Performance

year Tesla stock volatility
2010 56.6%
2011 6.7%
2012 18.9%
2013 343.8%
2014 47.9%
2015 7.9%
2016 -11.0%
2017 45.7%
2018 6.9%
2019 25.7%
2020 743.7%
2021 49.7%
2022 YTD -52.3%

China Covid Concern

Beijing is essentially on lockdown amid the city’s first Covid deaths in months. Further restrictions were imposed in China on Tuesday as the number of coronavirus cases reached an official all-time high.

Given that hundreds of millions of Chinese have yet to contract Covid, keeping a lid on the more infectious omicron variants will be extremely difficult.

It comes after China eased restrictions slightly, raising hopes that the country will roll back its zero-Covid policy.

The renewed restrictions will further chill China’s ailing economy, dampen demand for EVs including Tesla and raise renewed risks of production disruptions.

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Tesla demand

China’s Covid problems are causing concerns about Tesla demand, in part due to a huge increase in Shanghai production. Tesla has already cut prices in China, but there are reports in local media of further cuts before the end of the year, but waiting times are essentially zero. Tesla may be betting on a big quarter for European sales, but it could ease backlogs through 2023.

On January 1, EV subsidies ended in China and Norway, while Germany cut subsidies significantly. Sweden has just stopped EV subsidies while the UK is ending its programme. All of this could hurt Tesla EV demand and pricing in Europe and China.

This comes as China’s EV competition heats up with more and more models BYD (BYDDF), Nio (NIO), Lee Auto (LI) and mostly accepts Tesla’s aging Model 3 and Model Y models. Europe’s EV market is also becoming increasingly crowded.

Tesla, on the other hand, will be eligible for new US tax credits of up to $7,500 per vehicle. Tesla still faces less competition in its home market than in Europe and China.

The Tesla Cybertruck is expected to go into production next year, with Musk expecting “early” production in mid-2023. But if the oft-delayed Cybertruck stays on schedule, volume deliveries may not begin until the end of the year or until 2024.

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Elon Musk’s Twitter reign

Tesla CEO Elon Musk has had Twitter for less than four weeks, but it already seems like ages. He cut his staff by half, and many others quit. Over the weekend, Musk reinstated Donald Trump’s Twitter account, but then followed up with a vulgar meme aimed at the former president. Advertising revenues are declining.

All of this has raised concerns about Musk’s tarnished image. Even longtime TSLA bulls fear it could tarnish the Tesla brand.

Musk could also sell more Tesla stock to pay off his Twitter bills. Musk has sold Tesla stock several times this year, most recently citing Twitter as the reason for the two parties.

TSLA Stock Tracks EV Rivals, Aggressive Growth

Tesla stock is not doing well. But not alone. Aggressive stocks had a terrible 2022. In particular, Tesla’s EV rivals, including Nio shares, Li Auto, Rivian (RIVN) and BYD. So by that measure, TSLA stock doesn’t look too bad through 2022. However, shares of Nio, Li Auto and BYD all rose in November, while Rivian held back modestly, while Tesla lost a quarter of its shares. worth

More broadly, a bear market prevails for most of the year. While the major indexes have rebounded from their October lows, they are still down significantly for the year, especially the Nasdaq.

Follow Ed Carson on Twitter @IBD_ECarson for stock updates and more.


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