Tesla stock (NYSE: TSLA) hit a new 52-week low yesterday before eventually closing in the green. The stock has continued to slide in 2023 after a 65% fall in 2022.
2022 was the worst year ever for Tesla and it lost $675 billion of its market cap. Also, December was its worst month on record while Q4 2022 was the worst quarter ever. If that was not all, TSLA stock fell to a two-year low on the first trading day of 2023 after reporting subpar deliveries for the fourth quarter of 2022.
Just when it seemed that the stock was bottoming, it crashed yesterday on reports that it is cutting prices in China. Notably, TSLA lowered car prices in China in Q4 2022 also which helped it increase sales to a record in November.
However, in December, the company’s sales in China nosedived to a five-month low and almost halved as compared to November.
Markets see the price cuts as yet another sign of demand woes. Notably, TSLA CEO Elon Musk ruled out any demand-related issues during the third quarter earnings call and said that the company is not looking to cut production.
Tesla Stock fell on Reports of Price Cuts
However, in December, it suspended production in China. On its part, Tesla China tried to allay fears of a demand slowdown and said that the plant is shut for maintenance.
But few bought the argument as manufacturing companies in China shut their plants during the Lunar New Year instead. Even Tesla would close the plant for the Chinese Lunar New Year.
Meanwhile, as Tesla stock crashed, Musk tried to apportion the blame on Fed’s rate hikes. He tweeted, “As bank savings account interest rates, which are guaranteed, start to approach stock market returns, which are *not* guaranteed, people will increasingly move their money out of stocks into cash, thus causing stocks to drop.”
Musk Blamed Fed’s Rate Hikes for the Fall in Tesla Stock
However, not many believe that it’s only Fed’s rate hikes that are causing the crash in growth stocks like Tesla even as it indeed is among the key drivers. There is meanwhile a list of investments that can do well in periods of high inflation.
Musk even exhorted TSLA employees to not get “bothered by stock market craziness” an apparent reference to the crash in Tesla stock price. He also called upon employees to focus on year-end deliveries.
Eventually, Tesla delivered 405,278 cars in the fourth quarter of 2022, which was lower than what markets were expecting. After the subdued delivery report, TSLA stock plunged to a fresh two-year low.
Analysts meanwhile believe that the Inflation Reduction Act is a positive for Tesla stock. Many brokerages issued bullish notes on TSLA stock after the Act was passed and Wolfe Research upgraded Tesla stock to a buy and raised its earnings estimates.
Musk Believes TSLA Could become the Biggest Company
In his email to TSLA employees, Musk said that the company could eventually become the “most valuable company on Earth!” During the third quarter earnings call, Musk said that Tesla’s market cap would surpass the combined market cap of Apple and Saudi Aramco, the world’s largest and second-largest company respectively. He also said that Tesla might consider a buyback in 2023.
Musk previously predicted that TSLA would increase its deliveries at a CAGR of 50% over the long term and could deliver as many as 20 million cars by 2030. He has made bold predictions about the company’s autonomous driving software and robotaxis as well.
Dan Ives Wants Tesla to Provide Realistic and Conservative Set of Numbers
Meanwhile, Dan Ives of Wedbush, who was once among the biggest Tesla stock bulls is not too convinced. He said, “The Cinderella ride is over for Tesla, and Musk now needs to navigate the company through this Category 5 dark macro storm.”
He added, “Musk & Co. need to lay out a more conservative number to hit in this jittery backdrop and rip the Band-Aid off guidance.”
Tesla incidentally missed the 50% delivery growth forecast for 2022 and analysts don’t expect the company’s deliveries to rise by 50% in 2023 as well. Markets would next await Musk’s comments during the upcoming fourth-quarter earnings call where the company might provide its 2023 delivery guidance.
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