Elon Musk's warning about high-interest rates potentially impacting electric vehicle demand caused a significant drop in the shares of various companies in the EV sector, including Tesla. Tesla's stock closed down 9.3%, resulting in a loss of over $70 billion in market value. Rival companies like Rivian, Lucid Group, and Fisker also saw their stocks decline by 4% to 5%, while legacy automakers like Ford experienced a 2% drop.
This change in tone from Tesla's CEO, who previously claimed the company was “recession-resilient,” comes after Tesla missed revenue estimates by a significant margin and Musk acknowledged the difficulty of maintaining a 50% annual delivery growth rate. Some analysts expressed disappointment in Tesla's recent performance.
To meet its annual delivery target of 1.8 million vehicles, Tesla is expected to further reduce prices in the current quarter, even though its gross margin contracted from 25.1% to 17.9% in the past year. Analysts are skeptical about whether Tesla can maintain a sustained profitability advantage in the competitive auto industry.
Fifteen analysts lowered their price targets for Tesla, resulting in a median target price of $260. While Tesla's stock had been performing well in 2023 due to optimism about its ability to outperform competitors and the potential of its self-driving technology, it now trades at a much higher multiple of its forward earnings estimates compared to traditional automakers like Ford and General Motors.
In conclusion, the electric vehicle market is facing uncertainties, and Tesla's recent challenges have raised questions about its growth prospects and valuation in a competitive industry.
Leave a Reply