On Tuesday EST,$Tesla (TSLA.US)$The stock price fell by nearly 3%, which also extended its decline since this year to 36.77%. The market capitalization fell below 500 billion US dollars, and the current report is 499.44 billion US dollars.
Why is Tesla's stock price “falling and falling”?
Analysts believe that the deteriorating demand environment is the root cause of Tesla's recent poor trend.
On the evening of April 2, Tesla released delivery data for the first quarter of 2024, showing that Tesla's global delivery volume was 386,800 vehicles, significantly lower than the previous agency forecast of about 430,000 vehicles, down 8.3% year on year, and 20.1% month-on-month. At the same time, this is also the first time since 2020 that Tesla's delivery volume has declined quarterly year-on-year. Tesla's stock price once plummeted by nearly 7% due to delivery data.
On April 15, Tesla CEO Musk posted an email to all employees. The email mentioned that Tesla will lay off 10% of its employees globally. Tesla CEO Musk informed employees of the layoff plan on Monday, pointing out the need to reduce costs and increase productivity.
As a result of this layoff, Tesla's stock price fell more than 5% on Monday and continued to drop nearly 3% on Tuesday. However, looking back at the past, Tesla's previous layoffs have not aroused 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.
The pessimism caused by this layoff is also due to market concerns about the general cooling of demand for electric vehicles reflected behind the layoffs.
The house leak coincided with overnight rain. Just as “Tesla's internal letter announcing 10% global layoffs” caused a stir in the market on Monday, the US tram giant reported another personnel shock: Drew Baglino, Tesla's core executive and senior vice president of powertrain and energy engineering, announced his departure from the company he had been working for 18 years. After that, two of Musk's senior deputies also said they would leave the company. After news of Baglino's departure came out, the company's stock price dived by nearly 3%.
Together, these factors have caused Tesla to fall into a state of constant decline since the beginning of the year. However, Musk seems to have anticipated Tesla's current situation for a long time. In a letter to investors in January, Musk once stated, “Tesla is in the 'trough period' between the two waves of growth. The 'ceiling' for the Model 3 and Y has already appeared, and it will take time for new cars to launch in the middle and low end markets.”
Wall Street has lowered target prices one after another
As concerns about potential demand for electric vehicles intensified, many major banks such as Goldman Sachs, Citi, and Komo collectively lowered Tesla's target price.
Specifically, Bank of America lowered Tesla's target price from 280 US dollars to 220 US dollars, by as much as 21%. Analysts said:
We believe Tesla will face increasing pressure on profits due to weak demand. Unless Tesla enters new geographic markets, we think it will be difficult for the company to generate additional sales with its existing product portfolio or without further price cuts.
However, Goldman Sachs has lowered Tesla's target price three times during the year. The bank believes:
The main adverse factors facing Tesla include a larger drop in car prices than expected, increased competition for electric vehicles, and delays in products and functions such as FSD and third-generation platforms. As a result, although the company has long-term growth potential, it faces significant risks in the short term.
In response to Tesla's first quarter results meeting to be held next Tuesday (April 23), Dan Ives, a well-known Tesla analyst at the US investment bank Wedbush, said:
We need to hear Musk's reasons for cutting costs, future strategy, product roadmap, and overall vision, otherwise many investors may choose to leave Tesla's 2024 super-storm of weak global demand.
It is worth noting that Wells Fargo lowered Tesla's target price from 200 US dollars to 120 US dollars. This is currently one of the lowest price targets given by Wall Street for Tesla, which means that the stock will drop another 30%.
However, despite the high level of pessimism surrounding Tesla, there is still some positive news.
On April 6, Musk announced in a post on social media platform X: “Tesla will release a robotaxi (Robotaxi) product on August 8.” Tesla made major adjustments to its business strategy and decided to abandon the production plan for the cheap model Model 2 and instead concentrate resources on developing autonomous robot taxi technology.
Morgan Stanley analyst Adam Jonas believes that canceling or delaying the launch of Model 2 may be a recognition that manufacturing and selling electric vehicles using traditional consumption models may not create lasting economic value, and is optimistic about Tesla's future development of driverless taxi technology.
Also, in a recent interview with the media, Cathie Wood said that since Tesla dominates autonomous driving and robotics projects, she is still firmly optimistic about the long-term prospects of this electric vehicle manufacturer.
Cathie Wood pointed out, “Tesla is carrying out the world's largest artificial intelligence project through autonomous driving. By 2030, the entire autonomous taxi ecosystem will generate 8 trillion to 10 trillion US dollars in revenue, and platform vendors like Tesla will receive half of that revenue.”
She also mentioned Tesla's potential in humanoid robots. I think Tesla will use Optimus to become one of the leaders in the humanoid robot field. When humanoid robots are ready, they'll help car factories scale faster.
Dear cowboys,
When do you expect Tesla's stock price to stop falling and pick up?
Welcome to leave a message to discuss in the comments area~
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