Tesla shares suffer from New Year’s hangovers on demand concerns, supply woes

  • The top S&P 500 stocks lost on the first trading day of 2023
  • Selloff loses $50 billion in market value
  • Tesla misses Q4 car supply estimates
  • The EV company is still the world’s most valuable automaker

Jan 3 (Reuters) – Tesla Inc ( TSLA.O ) shares fell more than 12% on Tuesday to kick off 2023 on growing concerns about weak demand and logistics problems hampering supplies for the world’s most valuable carmaker. .

Tesla, once valued at more than $1 trillion, has lost more than 65% of its market value in a turbulent 2022 that saw it increasingly challenged by other automakers and faced with production problems caused by China’s COVID-19 lockdown .

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

The sale comes after Tesla missed market expectations for deliveries in the fourth quarter, despite shipping a record number of vehicles.

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“Tesla is now entering a solid but slower growth phase as it grows,” Morningstar analyst Seth Goldstein said. As a major automaker, it “could feel more of the impact of the economic slowdown,” he said.

Several Wall Street analysts said they expect more pressure on stocks in the coming months as competition increases and global demand weakens.

Global automakers have struggled in recent months with falling demand in China, the world’s top auto market, where the outbreak of COVID-19 has hit economic growth and consumer spending. Tesla offers huge discounts and subsidies for insurance costs there.

At least four brokerages cut their price targets and earnings estimates on Tuesday, pointing to a supply miss and Tesla’s decision to offer more incentives to boost demand in China and the United States, two of its biggest global auto markets.

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

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

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

“You have a lot of things working against the stock. One is obviously Musk’s Twitter presence,” said Dennis Dick, market structure analyst and trader at Triple D Trading.

Tesla’s market value has fallen by about $370 billion since CEO Elon Musk struck a deal to buy social media firm Twitter.

Part of that decline came from his stock sale to finance the $44 billion deal, which has also fallen amid investor concerns that Musk is being distracted by the social media company.

Worth about $341 billion, Tesla is still the world’s most valuable automaker, although 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, short of analysts’ estimates of 431,117 units. For all of 2022, its shipments are up 40%, missing Musk’s 50% annual target.

The result “came at the cost of higher incentives that offered lower prices and margins,” broker JPMorgan noted, lowering its price target to $125 from $25.

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

The shortage highlighted the logistics hurdles faced by the company, which is known for its quarter-end delivery rush. The gap between production and deliveries widened to 34,000 vehicles as more cars were stuck in transit.

Reuters reports that the automaker plans to run a reduced production schedule at its Shanghai plant in January, extending the reduced output it began in December until 2023.

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

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