Tesla shares plunge on demand worries, logistics issues

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

By Aditya Soni and Eva Mathews

(Reuters) – Shares of Tesla (NASDAQ:) Inc, which kicked off a run in 2023, where it stopped last year, fell more than 14% on Tuesday on growing concerns about weakening demand and other concerns. Logistics problems have hampered deliveries to the world’s most valuable automaker.

Once worth more than $1 trillion, Tesla lost more than 65% of its market value in a tumultuous 2022. Tuesday’s slide knocked out nearly $60 billion in market value, roughly equal to the valuation of rival Ford Motor (NYSE:) Co last year selling three times as many cars as Tesla.

The sell-off comes after Tesla fell short of market expectations for fourth-quarter deliveries despite shipping a record number of vehicles.

The company’s stock had the worst performer on the benchmark on Tuesday as it fell to $105. As of 18:00 GMT, it was the second most traded stock on US exchanges, with nearly 142 million shares changing hands.

Several Wall Street analysts said they expect more pressure on the stock in the coming months as it faces stiff competition from other automakers and global demand. weaker.

At least four brokerages cut their price targets and earnings estimates on Tuesday, pointing to slow deliveries and Tesla’s decision to offer more incentives to boost demand in China. and the United States, the two largest global auto markets.

Wedbush Securities analyst Dan Ives said: “Demand in general is starting to fall a bit for Tesla and the company will need to adjust and lower prices more, especially in China, which remains key. key to the growth story”.

Over the past few months, global automakers have been grappling with a slowdown in demand in China, the world’s top auto market, where the spread of COVID-19 has hit growth. economy and consumer spending.

Tesla is heavily discounting there as well as subsidizing insurance costs.

The electric vehicle maker’s performance in 2022 is among the worst on the S&P 500 index.

“You have so much going against stocks. One thing that’s clear is Musk’s involvement in Twitter,” said Dennis Dick, market structure analyst and trader at Triple D Trading.

Tesla’s market value has dropped by about $400 billion since CEO Elon Musk secured financing to buy social media company Twitter.

Part of that drop came from selling his stock to fund a $44 billion deal, while shares also lost value as investors worried that Musk was being ripped off by the company. Social media distraction.

Worth about $332 billion today, Tesla remains the world’s most valuable automaker, despite its output being a fraction of that of rivals like Toyota Motor (NYSE:) Corp.

Tesla delivered 405,278 vehicles in the fourth quarter, below analyst estimates of 431,117. For all of 2022, its deliveries grew 40%, well below Musk’s 50% annual target.

Brokerage JPMorgan said in a note that “the result is higher offers, which show lower prices and profits”.

The average price target of 41 analysts on the stock is $250, according to Refinitiv data, with prices as low as $85 by Roth Capital Partners.

The shortage has highlighted logistical hurdles faced by a company known for rushing deliveries at the end of the quarter. The gap between production and delivery has increased to 34,000 vehicles as more vehicles get stuck in transit.

The automaker also plans to implement a reduced production schedule in January at its Shanghai plant, extending already-declined output starting from December into 2023, Reuters reported.

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