Source: Finance Federation Author: Niu Zhanlin
① Tesla's stock price fell more than 3% in the intraday period, which extended its decline since this year to an astonishing 37%; ② 18 analysts have lowered the target price of Tesla stock this month.
On Tuesday EST,$Tesla (TSLA.US)$The stock price fell again by more than 3% in the intraday period, down 2.71% at the close. This also extended its decline since this year to an astonishing 37%. The market value fell below 500 billion US dollars, and now it is 499.44 billion US dollars. Generally speaking, after related companies lay off employees, stock prices tend to rise sharply because Wall Street will be satisfied with the prospects of improving efficiency and profits, but this time investors don't view Tesla that way.
Tesla CEO Musk informed employees of the layoff plan on Monday, pointing out the need to reduce costs and increase productivity, so he announced a 10% global layoff. Afterwards, two of Musk's senior deputies also said they would leave the company. This change reflects a general cooling in consumer demand for electric vehicles.
Musk added, “About every 5 years we need to restructure and streamline our company to prepare for the next phase of growth. There's nothing that annoys me more, but I have to do it.”
The layoffs caused Tesla's stock price to close down by more than 5% on Monday. Looking back at history, the company's previous layoffs did not trigger such pessimism in the market. In 2018, when Tesla laid off 9% of its employees, the stock price rose by more than 3% on the same day. In 2022, Tesla's stock price plummeted 9% after initial reports of layoffs, but after Musk made clarifying remarks a few days later, the stock price quickly rose.
Obviously, Tesla is in a different kind of predicament. Earlier this month, Tesla announced its first year-on-year decline in quarterly deliveries since 2020, arousing concerns about Tesla's prospects this year. In the first three months of 2024, the electric vehicle manufacturer delivered around 387,000 vehicles globally, down 8.5% year over year, the worst quarterly performance since the third quarter of 2022.
Prior to the layoffs, Tesla had been cutting prices and providing other incentives, which could have led to lower profit margins. Last week, the company said it would cut the subscription price for fully automated driving assistance (FSD) for US customers by half. As the electric vehicle market cools down, Musk is trying to promote an enhanced version of Tesla's driver-assisted driving software.
Target prices have been lowered one after another
According to the latest data from Kelly's Blue Book, the price of Tesla electric vehicles fell 9.7% year on year in March due to a “strong incentive plan,” but the lowest price appeared in January.
Of course, Monday's sell-off was not only due to layoffs, but Drew Baglino, senior vice president who worked at Tesla for 18 years, announced his departure. As the head of the powertrain and energy engineering department, Baglino often appeared with Musk and was responsible for projects such as Tesla's own batteries. Baglino, 43, was named a member of Tesla's leadership team in 2019.
Another 42-year-old executive responsible for policy and business development, Rohan Patel also wrote a farewell letter to his colleagues on Monday. In response, Musk thanked him for everything he did for Tesla.
Despite Musk's claims, reducing costs and increasing productivity is extremely important when considering every aspect of the company. However, analysts and investors saw demand issues, and 18 analysts have lowered their target price for Tesla shares this month.
Doug Clinton, managing partner at Deepwater Asset Management, said: “Just when you thought Tesla's news was too bad to be worse, the issue of demand for electric vehicles has continued to arise over the past few quarters. We now have questions about whether Tesla will produce a low-cost Model 2 and lower the price of the FSD.”
Analysts want Tesla's strategy to be more clear and point out that low-cost cars are important to Tesla's recent growth. Musk has said Tesla plans to launch robot taxis in August. Now it seems that it may take a little longer for this car to really become popular.
In addition to increased competition and problems in the electric vehicle industry, Musk has brought unpredictability. The billionaire is facing scrutiny from multiple regulators over his deal on X, and shareholders are also concerned about whether he has put enough attention into Tesla.
edit/lambor