$94 billion lost in value in 2 weeks – El Financiero

Tesla had a blockbuster performance in 2023 as its shares more than doubled in 12 months. But 2024 Starts on a different note: Elon Musk’s electric vehicle maker has Worst start of the year.

company Market valuation has been lost by over $94 billion Only in the first two weeks of 2024. It’s not hard to understand why the Austin, Texas-based electric vehicle maker has been hit by negative news: It’s taking on electric vehicle giant Hertz Global Holdings, a car rental giant. Signs of another price cut for Chinese-made cars and rising labor costs.

All this occurs in the context of slow development Want electric carsEspecially in the United States.

“Investors’ main concern about Tesla is sustainability in growth,” Cowen analyst Jeffrey Osborne said in an interview. price cut in china They only fuel those concerns, as it’s starting to look like “a race to the bottom for the electric vehicle industry, given the intense competition in that market.”

He Shock to Tesla’s market capitalization The company saw its biggest decline over the same period at the beginning of the year since going public in 2010. In percentage terms, Tesla’s 12 percent decline since the beginning of January is its worst since 2016, when the stock fell 14 percent. The first nine business days of the year.

To make matters worse, the prospects for the impending transition aren’t looking good for the electric vehicle maker.

Tesla is aggressively cutting the prices of its cars From early 2023 in an effort to boost demand. But the result is that its profit margins are continuously declining. Without regulatory credits, Tesla’s automotive gross margin fell to 16.3 percent in the third quarter from 27.9 percent a year earlier. And the pressure is only increasing, now that production workers at Tesla plants in the United States are getting pay increases.

“We are going through a period Cyclical recession for electric vehiclesBut competitive dynamics are adding to the cyclical pressures, Ivana Delevska, chief investment officer at Spear Invest, said in an interview. “Price cuts and declining margins are a function of this adverse competitive dynamic.”

To increase problems, Tesla has had to divert shipments destined for its Berlin plant following Western military actions in the Red Sea and security concerns, and is suspending most production at its plant near Berlin from January 29 to February 11, according to a person familiar with the matter.

Tesla ‘slow’: This is what the delivery figures have been like in recent months

Tesla first warned about slowing demand for electric vehicles during its third-quarter earnings report in October. Almost immediately afterward, automakers and suppliers around the world made their own pessimistic forecasts. Many automakers backed out of their expansion plans.

Then, earlier this month, Tesla reported its fourth quarter delivery numbers. Although they were better than analysts expected, they left the company behind China’s BYD in global electric car sales.

The result has been a Bad news for Tesla investors. Last year, the stock was the eighth-best performer in the S&P 500. So far this year, it is the eighth-worst performer.

Naturally, Musk is taking a big hit personally. The world’s richest man, who amassed more wealth in 2023 than any other person on the planet, has seen his net worth decline by $23 billion so far this year, according to the Bloomberg Billionaires Index. Musk overtook Bernard Arnault to top Bloomberg’s wealth index last year, but Jeff Bezos is now closing in fast, with $179 billion as of Friday’s close versus Musk’s $206 billion.

most of musk net worth That comes from its 13 percent stake in Tesla and about 304 million exercisable stock options. He owns about 42 percent of SpaceX, worth about $53 billion, according to the Bloomberg Wealth Index.

Tesla Has Problems, But It’s Still #1

All told, Tesla remains a major player in the global transition away from gasoline-powered vehicles to mostly electric vehicles. Reason: It is way ahead of its potential rivals. maybe china BYD It has overtaken Tesla in the number of units sold, but still lags behind in revenue and profits. And BYD does not sell cars in the United States, where Tesla remains the market leader.

In many ways, Tesla’s biggest problem may be its past success and the hope it generated. As investors poured into the stock, Tesla’s market capitalization skyrocketed, making it much larger than any other car company in the world. However, the fact that the stock was priced perfectly also made it vulnerable to big reactions to any negative news.

That’s why many Tesla defenders argue that it shouldn’t be compared to regular car companies. For him, the company’s true ultimate value lies in the future and his hope is to develop the first true autonomous vehicle. The only problem is that Tesla has been promising it for years, and most experts say the technology is still years, maybe even decades, away.

“Tesla has failed to deliver on its promises of fully autonomous driving and artificial intelligence,” said Speer’s Delevska, who is already under evaluation. “Just being another automaker won’t be enough to achieve a $750 billion valuation.”

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