Tesla set to erase $50 bln in valuation after Musk's sales warning (updated)
25/01/2024 12:44
(Updates share movement, adds data on short-seller profits)
By Aditya Soni
Jan 25 (Reuters) - Tesla TSLA.O tumbled more than 8%
on Thursday after CEO Elon Musk warned sales growth would slow
this year despite price cuts that have already hurt margins and
raised investor concerns at the world's most valuable automaker.
Musk said growth would be "notably lower" as Tesla focuses
on a cheaper, next-generation electric vehicle to be made at its
Texas factory in the second half of 2025, which is expected to
spark the next boom in deliveries.
But his remarks fell flat with investors, with Tesla set to
lose more than $50 billion in market value, if premarket loss
hold. Its stock was already down 16.4% this month, as of last
close.
"The Tesla headlines have essentially gone from bad to
worse," said TD Cowen analysts, noting that the fourth-quarter
revenue and profit were also below expectations.
Shares of other EV makers also fell, with Rivian Automotive
Inc RIVN.O , Lucid Group LCID.O and Fisker FSR.N down
between 1.2% and 2.4%.
The EV industry has been grappling with a slowdown in demand
for more than a year and the price cuts by Tesla will likely
worsen the pressure on the startups and automakers such as Ford
F.N .
"The problem for Tesla is any significant attempt to boost
sales from here on will probably need to be achieved at the cost
of further falls in operating margin, due to having to compete
with BYD in China, as well as increased competition elsewhere,"
said Michael Hewson, chief market analyst at CMC Markets.
At least, nine brokerages downgraded the stock, while seven
raised their ratings. The company, on average, has a "hold"
rating with a median price target of $225, nearly 9% higher than
the share's last closing price.
Tesla short sellers have made $3.45 billion so far this
year, making it the most profitable U.S. short trade, according
to data and analytics firm Ortex.
The company's stock trades at nearly 60 times its 12-month
forward earnings estimates, according to LSEG data. That gives
it a more premium valuation than the other "Magnificent Seven"
stocks – a group that includes Apple, Microsoft and Nvidia.
Some analysts said valuation could become tough to justify
if Tesla's sales growth and margin weaken further.
"Tesla is increasingly looking like a traditional auto
company," said Bernstein analyst Toni Sacconaghi.
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(Reporting by Aditya Soni in Bengaluru; Additional reporting by
Medha Singh; Editing by Arun Koyyur)
((Aditya.Soni@thomsonreuters.com; +91 80 6210 0555;))