Tesla Stock Plunges as Investors Focus on Fundamentals
Tesla (TSLA) shares have plummeted by 28% to $349.18 since reaching a record high in December 2024, making it the worst-performing stock among the "Magnificent Seven" tech companies.
Reasons for the Decline:
* Soft Sales in Overseas Markets: Sales in China and Australia have declined significantly, raising concerns about the impact of Musk's association with President Trump on the company's brand.
* Tariff Impact: New tariffs on steel and aluminum, key raw materials for Tesla, are increasing production costs.
* Trade War with China: China is a major supplier of materials used in Tesla's batteries, and the ongoing trade war with China adds uncertainty to the company's supply chain.
* Weak Fourth Quarter Results: Tesla's fourth-quarter earnings missed analyst estimates, with automotive sales falling 8% year-over-year.
* Delayed Self-Driving Rollout: The full self-driving rollout in Europe and China has been delayed, impacting revenue expectations.
Analyst Outlook:
* JPMorgan: Analyst Ryan Brinkman maintains an Underperform rating and a $135 price target, citing the high risk of mean reversion and potential catalysts that could drive the stock lower.
* Deutsche Bank: Analyst Edison Yu highlights the risk of demand softness due to EV fatigue and competition.
Technical Analysis:
* Tesla's stock has fallen below its key 50-day moving average and is approaching the 100-day moving average of $334.
* A break below $334 could trigger a further decline to the 200-day moving average of $286.
Conclusion:
Investors have shifted their focus to Tesla's fundamentals, moving away from the optimism surrounding Musk's political connections. Softening sales, the impact of tariffs, and disappointing earnings have contributed to the recent decline in the company's stock price. Analysts remain cautious on Tesla's prospects, citing risks related to demand, competition, and policy changes.