Tesla's Stock Plunges Amidst Falling Sales and Rising Costs
Key Insights:
* Tesla's (TSLA) stock has dropped 28% since December 2024, underperforming the "Magnificent Seven" tech giants.
* The stock has broken below its 50-day moving average and is approaching its 100-day moving average.
* Weak sales in overseas markets and tariffs imposed by President Trump are contributing to the downturn.
* Tesla's fourth-quarter earnings missed expectations, with lower automotive sales and margin pressure.
* Analysts have downgraded earnings estimates for Tesla in 2025 and 2026.
Market Sentiment Turns Bearish
Tesla's stock has been under pressure in recent weeks as investors reassess the company's fundamentals. JPMorgan analyst Ryan Brinkman has maintained an "Underperform" rating and a $135 price target, citing concerns about mean reversion and potential catalysts.
Overseas Sales Decline
Tesla's sales in China and Australia have declined significantly in recent months. In China, sales fell 33% in January compared to December. This has raised concerns that Tesla's close ties to President Trump may be damaging its brand.
Tariffs and Trade Tensions
President Trump's tariffs on steel and aluminum and his trade war with China are also impacting Tesla's costs. Steel and aluminum are critical raw materials for Tesla's vehicles. Additionally, 40% of Tesla's battery suppliers are Chinese companies, making the company vulnerable to political and economic changes.
Weak Fourth-Quarter Earnings
Tesla's fourth-quarter earnings disappointed investors. Earnings per share (EPS) missed estimates, automotive sales declined 8%, and profit margins were weak. The company also delayed the rollout of its full self-driving technology in Europe and China.
Analysts Lower Estimates
Analysts have slashed earnings estimates for Tesla in the wake of the weak earnings report. Deutsche Bank analyst Edison Yu believes that Tesla faces risks related to demand softness and competition in the electric vehicle market.