Tesla CEO Elon Musk's warning that high interest rates could sap electric vehicle (EV) demand knocked shares in the sector on Thursday, with some analysts questioning if Tesla can maintain the runaway growth that has for years set it apart from other carmakers.
The world's most valuable carmaker was set to lose nearly $50bn (R954.36bn) in market value based on premarket share movements.
Rivian, Lucid and Fisker fell by 2.4% while legacy carmakers Ford and General Motors lost 1.4% and 1.1%, respectively.
The comments marked a change in tone from Musk, who had said his company was “recession resilient” last year. The EV maker missed revenue estimates on Wednesday by the most in more than three years despite hefty price cuts.
“It didn't have the same zip. We await Tesla's earnings calls with a sense of excitement and suspense — and they usually deliver. Not Wednesday night,” Canaccord Genuity analysts said.
The company is expected to cut prices further in this quarter to meet its annual deliveries goal of 1.8-million vehicles, even after its gross margin contracted to 17.9% between July and September from 25.1% a year earlier.
“We continue to believe Tesla is a car company and the competitive nature of the industry will make it difficult for any player to have a sustained profitability advantage,” Bernstein analyst Toni Sacconaghi said.
Ten analysts cut their price targets on the stock, pushing the median view to $260 (R4,954), according to LSEG data.
Tesla shares fell 6.1% at $227.96 (R4,349) in premarket trading. The stock has nearly doubled in 2023 on investor optimism that the company will fare better than rivals in an uncertain economy and see a long-term boost from its self-driving efforts.
The stock trades at about 59 times its 12-month forward earnings estimates, compared with 6.3 times for Ford and General Motors' 4.2.
“The market valuation appears to rest on the specious assumption that the hundreds of EVs slated for launch by 2025 will all be flops. Tesla does not operate in a vacuum,” said Craig Irwin, senior research analyst at Roth Capital.
Musk's demand warning sparks sell-off in EV stocks
Image: GETTY IMAGES
Tesla CEO Elon Musk's warning that high interest rates could sap electric vehicle (EV) demand knocked shares in the sector on Thursday, with some analysts questioning if Tesla can maintain the runaway growth that has for years set it apart from other carmakers.
The world's most valuable carmaker was set to lose nearly $50bn (R954.36bn) in market value based on premarket share movements.
Rivian, Lucid and Fisker fell by 2.4% while legacy carmakers Ford and General Motors lost 1.4% and 1.1%, respectively.
The comments marked a change in tone from Musk, who had said his company was “recession resilient” last year. The EV maker missed revenue estimates on Wednesday by the most in more than three years despite hefty price cuts.
“It didn't have the same zip. We await Tesla's earnings calls with a sense of excitement and suspense — and they usually deliver. Not Wednesday night,” Canaccord Genuity analysts said.
The company is expected to cut prices further in this quarter to meet its annual deliveries goal of 1.8-million vehicles, even after its gross margin contracted to 17.9% between July and September from 25.1% a year earlier.
“We continue to believe Tesla is a car company and the competitive nature of the industry will make it difficult for any player to have a sustained profitability advantage,” Bernstein analyst Toni Sacconaghi said.
Ten analysts cut their price targets on the stock, pushing the median view to $260 (R4,954), according to LSEG data.
Tesla shares fell 6.1% at $227.96 (R4,349) in premarket trading. The stock has nearly doubled in 2023 on investor optimism that the company will fare better than rivals in an uncertain economy and see a long-term boost from its self-driving efforts.
The stock trades at about 59 times its 12-month forward earnings estimates, compared with 6.3 times for Ford and General Motors' 4.2.
“The market valuation appears to rest on the specious assumption that the hundreds of EVs slated for launch by 2025 will all be flops. Tesla does not operate in a vacuum,” said Craig Irwin, senior research analyst at Roth Capital.
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