Tesla tumbles after CEO Elon Musk warns of slower growth in 2024
25/01/2024 11:29
By Aditya Soni
Jan 25 (Reuters) - Tesla TSLA.O tumbled 7% 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 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 about $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 10 brokerages raised their price targets on Tesla,
while four raised their outlook. The median price target now
stood at $225, nearly 9% higher than the share's last closing
price.
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; Editing by Arun Koyyur)
((Aditya.Soni@thomsonreuters.com; +91 80 6210 0555;))