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Tesla shares began 2023 on another gloomy note, plunging nearly 14 percent Tuesday afternoon after the company missed fourth-quarter delivery estimates despite shipping a record number of vehicles.
Worth more than $1 trillion, Tesla lost nearly 65 percent of market value in a tumultuous 2022, wiping out more than $400 billion of the company’s market capitalization.
Tuesday’s plunge wiped another $50 billion off Tesla’s value, roughly equal to the valuation of rival Ford, which last year sold three times as many cars as Tesla.
The latest sell-off followed a downgrade of the shares by JPMorgan citing growing concerns about weakening demand and logistical problems that have hampered deliveries for the world’s most valuable automaker.
Tesla shares began 2023 on another gloomy note, plunging nearly 14 percent on Tuesday after the company missed estimates for fourth-quarter deliveries.
Tuesday’s slide made Tesla the worst performer in the S&P 500 of the day.
Several Wall Street analysts said they expected more pressure on the stock in the coming months as it faces stiffer competition from other automakers and weaker global demand.
At least four brokerages cut their price targets and earnings estimates on Tuesday, pointing to a lack of deliveries and Tesla’s decision to offer more incentives to boost demand in China and the United States, the world’s two biggest auto markets. .
“Demand in general is starting to crack a bit for Tesla and the company will need to adjust and lower prices more especially in China, which remains the key to the growth story,” said Dan Ives, an analyst at Wedbush Securities.
In recent months, global automakers have battled a slump in demand in China, the world’s No. 1 auto market, where the spread of COVID-19 has hit economic growth and consumer spending.
Tesla offers significant discounts there, as well as a subsidy for insurance costs.
Tesla’s 2022 stock performance was among the worst in the benchmark S&P 500 index
Tesla delivered 405,278 vehicles in the fourth quarter, below analyst estimates of 431,117
The electric vehicle maker’s performance in 2022 was among the worst in the benchmark S&P 500 index.
Tesla shares last traded at $107.11, and its market value has declined by about $400 billion since Chief Executive Elon Musk secured financing to buy social media firm Twitter.
Worth around $340 billion now, Tesla remains the world’s most valuable automaker, even though its output is a fraction of rivals like Toyota.
Tesla delivered 405,278 vehicles in the fourth quarter, below analyst estimates of 431,117, according to Refinitiv. For all of 2022, its deliveries are up 40 percent, missing Musk’s 50 percent annual target.
The result “came at the cost of higher incentives, which suggests lower prices and margins,” brokerage JPMorgan said in a note, lowering its price target by $25 to $125.
The shortfall highlighted the logistical hurdles facing a company, which is known for its rush of deliveries at the end of the quarter.
The gap between production and deliveries has widened to 34,000 vehicles as more cars get stuck in transit.
The automaker also plans to run a scaled-down production schedule in January at its Shanghai plant, extending scaled-down production that began in December through 2023, Reuters reported.
Last week, well-known tech stock analyst Dan Ives of Wedbush Securities shared an investor wish list of 10 stocks to help Musk resurrect the company in 2023.
The first thing to do is name a new Twitter CEO by the end of January, which Ives said is “key to Tesla’s stock.”
Wedbush Securities analyst Dan Ives has shared an investor wish list of 10 stocks to help Musk resurrect the company in 2023. With the first order of business urging Musk to find a new Twitter CEO
“Musk needs to course correct this Twitter train wreck and it starts with a new CEO to lead the charge,” Ives told DailyMail.com.
Musk started this five-alarm fire with Twitter. He is the only one who can extinguish it.
Most of the points on the list urge Musk to shift his attention away from Twitter and back to Tesla in the new year.
Ives is a well-known Tesla bull who isn’t shy about sharing his thoughts on the company and its CEO.
He sent a separate email to reporters in November, revealing that Wedbush had removed Tesla from his Best Ideas List, and again, it was due to Musk’s “Twitter circus” tarnishing the “pristine EV brand.”
However, Ives hasn’t given up entirely on Tesla and Musk, hoping the 10 shares will help the billionaire reconcile with investors.
Another wish among investors is for Musk to stop selling Tesla stock, which he has done to finance Twitter.
Earlier this month, Musk sold another $3.58 billion worth of stock, almost 22 million shares, and dumped it all in three days.
As investors watch stocks slide, Musk recently told employees they shouldn’t “get bothered by the madness of the stock market” after the company’s shares plunged nearly 70 percent this year.
The drastic drop has been blamed on jitters over declining demand for electric cars and Musk’s distraction with Twitter, which investors say has hurt Tesla’s finances.
To this, Ives suggested that Musk “formally adopt a 10b5-1 plan, so investors know there isn’t a major selling block around the corner, as Musk sold approximately $40 billion worth of TSLA stock on last year”.
Amid Musk’s Twitter fiasco, Tesla’s missed deadlines have also hurt the company’s reputation.
Musk has long promised deliveries of the Tesla Cybertruck since it was first unveiled in 2019, and the world has yet to see the vehicle hit the market.
“Announce that Cybertruck deliveries will hit the road in late 2023,” Ives shared.
“Time is of the essence here with competition from all angles and concerns that production issues will push this to 2024.
Most of the points on the list urge Musk to shift his attention away from Twitter and back to Tesla in the new year.
“Giga Austin is up and running and now is key to achieving this next growth effort for Tesla.”
The Wedbush analyst also urges Musk to set conservative 2023 deliveries for all Tesla vehicles.
The other points include adding new directors to the board, but those with more experience in electric vehicle technology and leadership, and announcing a major share buyback program.
Musk also needs to provide more financial metrics and transparency around the margin structure at Tesla, according to Ives.
“We think this is a hidden gem in the company with the most production/sales in China and Giga Berlin and Austin increasing,” he shared.
And the last two points focus on Musk’s behavior on Twitter, which echoes Ives’ email in November.
Amid Musk’s Twitter fiasco, Tesla’s missed deadlines have also hurt the company’s reputation. Musk has long promised deliveries of the Tesla Cybertruck since it was first unveiled in 2019, and the world has yet to see the vehicle hit the market.
“The more political Musk gets on Twitter is a bad thing for selling electric cars to the masses. It’s that simple, and it remains a key concern for investors,’ Ives shared.
Design the strategic plan for Twitter.
“Right now, the fear is simply that Twitter is losing money with advertisers fleeing (for now), which means more losses and therefore more sales of Musk TSLA shares. Once a new CEO is in place, map out Twitter’s 3-year strategy and what it can become, Super App, ‘X’, WeChat 2.0, etc.
Despite his criticisms, Ives has not given up all hope on the company and Musk.
“He’s a modern Albert Einstein or Thomas Edison going through what seems to be a Howard Hughes moment,” Ives told DailyMail.com.
“He will lead Tesla through the storm we believe in.”