The Tesla selloff has put retailer traders and investors one edge. Tesla stock price improved marginally on January 4, giving hope of a resurrection before falling back into the trenches. Once worth over $1 trillion, Tesla stock has plummeted by almost 70%, knocking off CEO Elon Musk from the top of the world’s richest list.
According to experts, nearly $25 billion worth of Tesla stock changed hands on January 3. Analysts expect the Tesla selloff to continue as the company missed market expectations for the fourth-quarter coupled with lessening demand in China.
Tesla Stock Selloff continues
On January 4, investors were given a brief respite after watching Tesla stock slide drastically, especially during the latter part of the year. It briefly hit $113.56, after hovering around $110 for the past few days. After falling nearly 12% on Tuesday, stocks climbed a moderate 5%, making a small comeback.
For a brief moment, it seemed that the accident in Northern California, where a family drove off a cliff in their Tesla car had some effect on the stock. Despite tumbling nearly 300 feet down a cliff next to the Pacific Ocean, the family of four escaped with minor injuries. Pretty much a metaphor for Tesla’s Wednesday performance at the stock market.
But just as law officials clarified that they had arrested the Tesla driver, the father, for intentionally driving off the cliff, markets saw a huge Tesla selloff the very next day. What appears to be a good end result is not lasting unless the intention behind the extreme step matches the outcome.
Last year in January, Tesla stock had hit $368.74 per share. The drastic reversal in fortune has been brought on partly by high inflation, lessening demand, and the controversy surrounding Elon Musk’s takeover of Twitter.
In December 2022, Tesla shares suffered due to strict Covid-19 lockdowns at its Shanghai factory. The production pause added to the electric carmaker’s woes, with the decline carrying over into the new year.
In an attempt to lure buyers, the automaker has reduced prices for its models in China. The Model 3, Tesla’s least expensive vehicle, now costs about $33,427 down from about $38,704, as per the company’s website. The price of the Model Y was lowered to $37,830, down from about $42,051.
Panicked retailers Adopt Risk-Averse Approach
As of January 3, the electric carmaker had wiped off all the gains it accumulated since it was added to the S&P 500 in 2020.
What was once considered a solid hold stock, is now falling as it fails to meet market expectations. Add to it the alleged unavailability of the Tesla CEO, who has taken over the helm at Twitter, even the most optimistic investor cannot ignore the facts.
Unless investors see concrete proof that Tesla is working on changing its trajectory, they might continue with the Tesla selloff. As inflation persists despite Fed rate hikes, small time traders want to tread cautiously.
“Tesla, as it has grown, is now entering a phase of still solid but slower growth,” said Morningstar analyst Seth Goldstein. Being a major auto producer, it “is likely to feel more of an impact from an economic slowdown”, he added.
Some brokerages have also cut price estimates and earnings forecasts, further dampening the mood in a slow economy. Tesla is also facing increased competition from established automakers like Ford and GM, who are now taking the EV market by its horns.
Worldwide, Tesla delivered 405,000 vehicles in the fourth quarter, almost 13,000 short of consensus forecasts of 418,000.
Furthermore, whispers of a recession this year has made traders reconsider their portfolios, and as Tesla loses steam in sales and leadership, investors have taken to dumping stock.
It remains to be seen whether Tesla share prices will recover down the line, as the electric carmaker has proven to be resilient during crashes, in real-life and on the stock market.
