Tesla shares continue to slide as demand shrinks and logistical hurdles | Tesla

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Tesla shares picked up 2023 where they left off last year, dropping more than 14% on Tuesday on mounting concerns about weak demand and logistical problems that have hampered deliveries to the world’s most important automaker.

Once valued at more than $1 trillion, Tesla has lost more than 65% of its market value in a turbulent 2022. Tuesday’s market value slipped from nearly $60 billion in market value, roughly equaling the valuation of rival Ford, which last year sold three times as many cars as Tesla.

The sale came after Tesla missed market expectations for fourth-quarter deliveries despite shipping a record number of vehicles.

The company’s stock was the worst performer on the benchmark S&P 500 on Tuesday, dropping to $105. As of Tuesday morning, it was the second most traded stock on US exchanges, with nearly 142 million shares changed hands.

Several Wall Street analysts said they expect more pressure on the stock in the coming months as it faces stiff competition from other automakers and weak global demand.

At least four brokerages cut their price targets and profit estimates on Tuesday, pointing to non-delivery and Tesla’s decision to offer more stimulus to boost demand in China and the United States, the two largest global auto markets.

“Overall demand is starting to collapse a little bit for Tesla and the company will need to adjust and lower prices particularly in China, which remains key to the growth story,” said Dan Ives, an analyst with Wedbush Securities.

Global automakers have grappled in the past few months with a slump in demand in China, the world’s largest car market, as the spread of Covid-19 hits economic growth and consumer spending.

Tesla offers deep discounts there as well as a subsidy for insurance costs.

The electric car maker’s performance in 2022 was among the worst on the S&P 500.

“You have a lot of things working against the stock. Obviously one of them is Musk’s Twitter post,” said Dennis Dick, market structure analyst and trader at Triple D Trading.

Tesla’s market value has fallen by nearly $400 billion since CEO Elon Musk secured funding to buy social media company Twitter.

Some of that decline came from selling his stake to fund the $44 billion deal, while the stock also lost out on concerns among investors that the social media company was distracting Musk.

Tesla is worth about $332 billion now and remains the most valuable automaker in the world, even though its production is a fraction of competitors like Toyota.

Tesla delivered 405,278 vehicles in the fourth quarter, short of analyst estimates of 431,117. For the full year of 2022, deliveries were up 40%, missing Musk’s annual target of 50%.

Brokerage JPMorgan said in a note that the result “came at the cost of higher incentives, which indicate lower prices and margins,” and cut its price target by $25 to $125.

The average price target of 41 analysts per stock was $250, according to Refinitiv data, with the lowest price of $85 by Roth Capital Partners.

The shortfall highlighted the logistical hurdles facing the company, which is notorious for speeding deliveries at the end of the quarter. The gap between production and delivery widened to 34,000 cars as more cars stopped in transit.

The automaker also plans to run a reduced production schedule in January at its Shanghai plant, extending the reduced production it began in December into 2023, Reuters reported.

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