Elon Musk's sales warning caused a $80 billion decline in Tesla's value

Elon Musk's sales warning caused a $80 billion decline in Tesla's value

Elon Musk's sales warning caused a $80 billion decline in Tesla's value

Tesla's $80 billion value reduction after Musk's sales warning

Elon Musk, the CEO of Tesla, warned on Thursday that sales growth will stall this year despite price reduction, which has already weakened and affected the profitability of the most valuable manufacturer in the world. As a result, Tesla's stock plunged more than 12%. Investor worries about demand and Chinese competition have increased as a result.

Musk said on Wednesday that growth would be "much lower" as Tesla concentrates on producing a more affordable, next-generation electric car at its Texas manufacturing in the second half of 2025, which is anticipated to spark the company's next wave of deliveries.

However, he noted that since the new model would need cutting-edge technology, scaling up manufacturing would be difficult.

Tesla's shares lost $80 billion in market value on Thursday after seeing its worst intraday percentage decline in over a year. This resulted in a monthly market capitalization loss of around $210 billion.

Analysts at TD Cowen said that Tesla's news has effectively gotten worse, pointing out that the company's fourth-quarter earnings and sales fell short of forecasts.

Other EV manufacturers saw a decrease in share prices as well; Fisker, Lucid Group, and Rivian Automotive Inc. had decreases ranging from 4.7% to 8.8%.

For more than a year, the EV sector has been struggling with a decrease in demand, and Tesla's price reduction is probably going to put further strain on new businesses and manufacturers like Ford.

"The issue facing Tesla is that, in order to compete with BYD in China and other markets, any major effort to increase sales from this point will probably have to come at the expense of further declines in operating margins." because of the growing competition," he said. Michael Hewson is CMC Markets' chief market analyst.

Seven brokerages increased their ratings for the stock, while at least nine reduced it. With an average price target of $225—23% higher than the stock's closing price of $182.63 on Thursday—the firm is rated as a "Hold" on average.

According to data and analytics company Ortex, short sellers of Tesla have profited $3.45 billion so far this year, making it the most lucrative short bet in the United States.

The company's stock is now selling at around 60 times its projected 12-month profits, according to LSEG statistics. Compared to other "Magnificent Seven" equities, which include Apple, Microsoft, and Nvidia, it is thus valued at a higher premium.

Some experts predicted that if Tesla's margins and sales growth continue to deteriorate, it would be difficult to defend the value.

Tesla is beginning to resemble a conventional automaker, according to Tony Sacconaghi, a Bernstein analyst.