(CNN) — Tesla shares fell as much as 12% after the market opened on Thursday, wiping $80 billion off the company’s market value just hours after warning of slowing growth in electric car sales and the threat of Chinese competition.
Tesla shares suffered their worst day in 21 months and closed at their lowest since December 2022. Since the beginning of 2024, the company’s market capitalization has fallen by $210 billion.
In an earnings call on Wednesday, the world’s most valuable automaker said its sales growth this year “could be significantly lower” than last year as it continues to develop a “next generation” vehicle, possibly a smaller model. price.
While it recorded a massive 38% increase in deliveries last year compared to 2022, Tesla had previously targeted an average 50% annual growth rate over the next several years.
Tesla’s financial results for the latest quarter also disappointed, with adjusted earnings per share falling 40% from a year earlier, and revenue, which rose 3% to top $25 billion, falling short of forecasts. . From the market.
After a series of better-than-expected results at the start of 2021, it was the second consecutive quarter in which the company missed analysts’ expected earnings.
The stock price is set to double during 2023, but those gains came during the first half of the year, and Tesla stock is off to a weak start in 2024, falling 16% ahead of Wednesday’s earnings report. The stock is currently trading at its lowest level since April last year.
Thursday’s intraday losses were equivalent to an unusually large one-day decline of 11.4% in late December 2022. At the time, investors were concerned about the outlook for Tesla’s sales and profitability, as well as the health of the US economy.
Tesla’s fourth-quarter earnings also revealed earnings under pressure. The company’s operating margin nearly halved to 8.2% compared with the same period in 2022, partly due to increased costs related to the production of the Cybertruck pickup truck. The new model entered production in late 2023.
Dan Ives, an analyst at market research firm Wedbush, said Tesla’s earnings call provided “minimal reactions” from investors to the company’s declining margins.
“It was completely wrong to expect Musk and his team to come forward as the adults in the room and talk about continued price cuts, margin structure and fluctuating demand,” the company wrote in a note Thursday. “Will provide strategic and financial perspective.”
China’s threat
Tesla has been cutting prices for more than a year in an effort to boost sales in the face of increasing competition from rivals in China.
China’s BYD overtook Tesla in the last three months of last year and sold more cars than Elon Musk’s automaker for the first time.
Musk told analysts on Wednesday’s earnings call that Chinese automakers are “the most competitive auto companies in the world” and “they will have significant success outside of China.”
“Frankly, I think if trade barriers weren’t put in place, they would pretty much collapse most other car companies in the world,” he said.
Increasing competition from BYD and other Chinese automakers led to an investigation anti dumping by European authorities, which could lead to higher tariffs being imposed on car imports from China. He dumping Refers to the practice of exporting goods to a country at prices that do not reflect their cost.
Interested in buying?
While Tesla’s earnings were “disappointing and uneconomical”, Garrett Nelson, senior equity analyst at CFRA Research, expects the launch of its low-cost vehicle to give the stock “the catalyst it needs” in the coming years. This Wednesday in a note.
Ben Barringer, technology analyst at Quilter Cheviot, is also optimistic. He thinks the macroeconomic environment has started to tilt in Tesla’s favor.
“Interest rates will start falling. “This will be a real positive for Tesla, as well as the automotive sector in general, as consumers purchase their vehicles with financing,” he wrote in a note Thursday.
Chris Isidore contributed reporting.
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