Big losses: A Tesla Roadster is parked in New York’s Times Square. The EV maker has had around US$720bil (RM3.2 trillion) of shareholder value wiped out this year, yet some analysts’ overall stance remains bullish on the stock. — Bloomberg
NEW YORK: The tailspin in Tesla Inc shares accelerated, marking their longest losing streak since 2018, as a report of a plan to temporarily halt production at its China factory rekindled fears about demand risks.
Shares of the Elon Musk-led company closed down 11% at US$109.10 (RM484.25), for the seventh straight decline and its steepest one-day drop since April.
The electric vehicle (EV) maker’s market valuation has shrunk to roughly US$345bil (RM1.5 trillion), below that of Walmart Inc, JPMorgan Chase and Co and Nvidia Corp.
This latest sell-off also cost Tesla its position among the 10-highest valued companies in the S&P 500 Index, a distinction it held since joining the benchmark in December 2020.
News of reduced output in Shanghai comes on the heels of last week’s report that Tesla was offering US consumers a US$7,500 (RM33,289.50) discount to take delivery of its two highest-volume models before year-end, combining to intensify concerns that demand is ebbing. For Tesla, whose valuation is pinned on its future growth prospects, these worries reflect a significant risk.
“Most of the stock’s weakness this year is due to indicators showing flagging demand globally,” said Craig Irwin, an analyst at Roth Capital Partners.
Tesla’s estimated revenue growth “is still amazing, but not US$385bil (RM1.7bil) market valuation-type amazing,” he said, referring to the value at the end of last week.
Analysts on average expect revenue to grow 54% in 2022 and 37% in 2023, data compiled by Bloomberg showed.
The hope that Tesla will be the leading EV company in a future dominated by electric cars drove a spectacular eight-fold rally in the shares in 2020, earning its place in the S&P 500 and at one point making it the fifth most valuable stock in the gauge.
But this year the unwinding has come equally fast. It has lost 69% its value amid Musk’s Twitter takeover and related distractions, investor jitters about growth assets and most recently, worries that high inflation and rising interest rates will dampen consumers’ enthusiasm for EVs.
“Our sense is the company’s market share has peaked and concerns about its over-reliance on China for profits and the factory shutdown are weighing on the stock,” said Jeffrey Osborne, an analyst at Cowen.
Tesla “appears to have burned through its backlog as they are resorting to promotions to move cars and delivery lead times are one to two weeks in the majority of the world.”
Wall Street analysts started flagging warnings about EV demand earlier this month, with the average 12-month price target for Tesla falling 10% since the end of November.
Meanwhile, the average adjusted earnings estimate for 2022 has declined over 4% from just three months ago.
Tesla has now seen around US$720bil (RM3.2 trillionl) of shareholder value evaporate this year.
The collapse is among the biggest contributors to the S&P 500’s decline in 2022, after Amazon.com Inc, Microsoft Corp and Apple Inc.
Still, analysts’ overall stance on Tesla remains bullish, with the highest share of “buy” or equivalent ratings since early 2015. — Bloomberg
