Tesla’s market value has plummeted by a quarter in under two months, a staggering $400 billion drop. Yet, Wall Street sends a warning to potential investors: approach with caution.
Tesla Inc. has endured a significant decline in stock value, making it the poorest performer among its megacap peers this year, and standing as the third weakest in the Nasdaq 100 Index. Despite this, analysts remain skeptical, suggesting that the stock’s depressed state might still not reflect its true value, given weakening sales in crucial markets.
Observation from chart-watching strategists indicates further caution, even after a small rally in Tesla shares over the past few days. Investors hoping for another dramatic rise in stock value, similar to the post-election surge in Trump’s era, might face mixed outcomes.
Mark Newton, head of technical strategy at Fundstrat, predicts that Tesla’s stock hasn’t hit bottom just yet, and anticipates another decline, potentially within the next week or two. He identifies a potential fallback to around $314, close to where it stood after the U.S. election, marking a 12% drop from current figures.
In recent months, despite Tesla’s stocks nearly doubling from November through mid-December due to optimistic market sentiments about Musk’s influence in the political sphere, realities of its electric vehicle business crippled growth prospects. The company revised down its vehicle-sales growth forecast in its January 29 earnings call, with dismal sales reports from major markets such as Germany, France, China, and California exacerbating the stock’s descent.
Evercore ISI analyst Chris McNally casts doubt on imminent stock recovery, citing a lack of significant updates on Tesla’s self-driving car endeavors. The stock is predicted to remain subdued in anticipation of Tesla’s planned robotaxi service in June.
Currently, Tesla’s shares are valued at 119 times projected earnings, starkly higher than the 30 times for the Magnificent Seven—a cohort of major U.S. technology firms—and 22 times for the S&P 500 Index. Steve Sosnick, chief strategist at Interactive Brokers, comments on the hefty future growth anticipated in the stock price, cautioning that any disappointment could lead to further declines before more value-focused investors might regain interest.
Matt Maley, chief market strategist at Miller Tabak + Co., projects continued weakness for Tesla, reinforcing the belief that the stock is trading above its fundamental outlook. Recent market volatility underscores this sentiment, where traders express less optimism, particularly with rising volatility signaling increased concern over potential downturns.
In conclusion, Tesla’s present stock status reflects a scenario fraught with uncertainty and apprehension, as investors grapple with mixed signals from market movements and company forecasts. Short-term rallies provide little assurance against broader systemic challenges, suggesting that cautious optimism is necessary for those considering investments in Tesla’s volatile share environment.
