If Tesla’s valuation has experienced a significant decrease of $80 billion due to Elon Musk’s sales warning, it’s crucial to consider the context of the warning and the impact it may have on investor confidence. Elon Musk’s statements or actions, especially related to sales projections or market conditions, can influence Tesla’s stock price.
Tesla Inc. shares have seen a significant decline, losing nearly one-fifth of their value or $145 billion, in less than two weeks, Bloomberg reported. This drop is due to increasing worries about a weakening demand for electric vehicles (EVs), it added.
As a pure-play EV manufacturer with a substantial valuation, Tesla faces high stakes. Its share price, though expensive, partly hinges on its ability to maintain its dominant position in the EV market and its profit margins.
Despite the challenges, Tesla experienced a notable rebound during midday in New York. This resurgence followed the company’s successful defense against claims that its Autopilot technology caused a fatal accident four years ago.
Tesla (TSLA.O), opens new tab tumbled over 12% on Thursday after CEO Elon Musk warned sales growth would slow this year despite price cuts that have already hurt margins at the world’s most valuable automaker and fueled investor concerns about soft demand and Chinese competition.
Musk said on Wednesday that 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.
The stocks downgraded their value, by approximately nine stocks. Few stocks showed a rise around seven raised their ratings. The company, on average, has a “hold” rating with a median price target of $225, 23% higher than the share’s closing price of $182.63 on Thursday.
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 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.