Betting on the stock market isn’t for the fainthearted. But it takes an iron constitution to buy in on Tesla. True, those who’ve hung with the automaker since its early days have been well rewarded. But recent years have taken investors on a rollercoaster ride. And nowhere has it been more apparent than over the past few months. After nearing a 52-week high late last year, Tesla shares have been in decline. And that’s now showing signs of turning into a full-on rout, even some long-term Tesla bulls getting worried.
Tesla shareholders have been on a wild ride for much of 2024. The stock has been on the decline since New Year’s.
Over the past two days, Tesla shares have lost nearly 15% of their value, wiping out hundreds of millions of dollars in shareholder value and leaving Wall Street wondering why — and how much further the automaker’s stock might plunge.
The answer to both questions is unclear. And that’s contributing to further declines on Thursday where Tesla stock already was down by as much as 3% in mid-morning trading — reaching its lowest point since May 2022.
At one point, it dropped below $174 a share before rebounding ever so slightly. To add perspective, Tesla’s 52-week high was $299.29. And in a strong September surge, it topped out at just over $270 a share.
An avalanche of setbacks
Tesla’s stock is beginning to hit the skids
Traded under the Nasdaq ticker TSLA, the stock appears to be feeling the impact of numerous headwinds: concerns about Tesla’s weakening position in China, its declining U.S. market share and lower than expected sales, among the most quoted factors.
There’s the situation in Europe — where Tesla last year had the continent’s best-selling model line. German authorities blame eco-terrorists for sabotaging a power line feeding the automaker’s Berlin Gigafactory, interrupting production.
But more than a few experts and investors are pointing the finger at Tesla’s increasingly controversial CEO Elon Musk. Some reports suggest his turn to the extreme political right — amplified through his social media site X — has alienated buyers, especially in the U.S. But, even from a non-political standpoint, Musk is coming under fire.
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The bulls go into retreat
Tesla’s stock troubles are even beginning to worry long-time supporters and investors
Some of Tesla’s most fervent bulls are rethinking their support.
Ross Gerber, the high-profile half of investment fund Gerber Kawasaki, has leveled a series of blasts at the South African-born Musk. Among other things, Gerber feels the CEO has too many unfinished projects to deal with.
One has to remember that Musk not only runs Tesla but a handful of other companies such as SpaceX. He’s pushing into the futuristic world where digital tech is implanted into the brain. He wants to take the lead in artificial intelligence. And his Boring Company still wants to build tunnels under major U.S. cities.
Then there’s Tesla which is struggling to retain its lead in several key markets. In the U.S. it will be challenged by a flood of new models — as many as 50 new EVs such as the Rivian R2 coming to market this year alone. Tesla did introduce the Cybertruck in November but production volumes are expected to remain low. And the recent update of the Model 3 hasn’t set the world on fire. If anything, Tesla missed its sales forecast last year and Musk admitted 2024 could be a tough year, as well.
In China, meanwhile, the Texas-based automaker saw local manufacturer BYD become the number one EV manufacturer during the fourth quarter. Meanwhile, problems at Nio, another Chinese EV brand, have also raised concerns about the Chinese EV market.
Elon Musk is facing pressure from the company’s board to change his behavior and give up control
Until now, Wall Street gave Tesla the sort of multiples normally reserved for only the top tech companies, like Apple or NVIDIA. Now, however, “Investors are revaluing Tesla more as a hardware company than a software company because they are having to resort to all the levers that car companies do to increase demand,” Gerber said in a CNBC interview on Monday.
Musk under fire
“Between Elon’s behavior and the lack of completion to a lot of these projects, Tesla is just coming down to earth to a much more reasonable valuation, to where it kinda should be,” Gerber said.
He’s not the only one worried. A group of 17 shareholders last year sent a letter to Tesla’s board demanding it rein in Musk. That seems to have had little impact. He recently demanded that he get a controlling 25% stake in Tesla. Otherwise, Musk warned, he would refuse to merge his AI venture into the automaker — the operation seen as critical in a number of ways, including helping finally achieve the company’s goal of full hands-free driving with products like its Full Self-Driving software.
How low can Tesla go?
Tesla delivered the first of its all-electric semi trucks in 2022.
One of the forces behind this week’s TSLA share price plunge is Adam Jones, the well-respected Morgan Stanley analyst who has been one of the automaker’s biggest backers.
Describing 2024 as a “challenging year for EVs,” Jonas dissed Tesla’s current products as “relatively aged.” He sees Tesla global sales climbing this year, but only to 1.8 million, well off the consensus Wall Street forecast of 2.1 million. And he’s cut the carmaker’s earnings forecast, as well.
Jonas still sees Tesla shares gaining back lost ground — and then some. But he cut his current target price to $320 a share, down from $345. And others are questioning whether it can make even the lower target.
The coming days could offer some insight. Then again, Tesla has that history of making big gains after suffering sharp losses. Even some modest improvements in sales, or setbacks to its competitors could put it back on a SpaceX-style rocket ride.
One problem is that Tesla is so intertwined with Elon Musk. He’s made it so when you buy a Tesla you are buying a car from him and impliedly buying into his craziness. That doesn’t happen with other automakers. If I buy a Ford, I don’t feel like I am buying into whatever the political and social opinions the Ford family holds.