Tesla sheds nearly $250 billion in market cap as the EV maker’s stock passes Boeing as the S&P 500’s biggest loser this year
Shares of Tesla Inc. extended their selloff toward a 10-month low Wednesday, as a Wells Fargo analyst moved to a bearish stance on the stock.
With Wednesday’s 3.6% move lower in afternoon trading, Tesla TSLA, -4.23% is set to end the day below JPMorgan Chase & Co. JPM, -1.10% in terms of market capitalization. Tesla was worth $544.9 billion based on Wednesday’s intraday action, while JPMorgan was worth $551.1 billion. Tesla would be the 12th largest U.S. public company by market cap.
Despite seeming like a growth company, Tesla’s business has been nearly flat in the European Union and China over the last 12 months, while its U.S. business has been down since the second quarter, Wells Fargo’s Colin Langan noted in his downgrade. He cut his rating on Tesla’s stock to underweight from equal weight Wednesday.
Tesla shares are off 31.2% on a year-to-date basis in a downward move that’s wiped out about $246.5 billion from the company’s market capitalization. The electric vehicle giant’s stock is now the S&P 500 index’s SPX worst performer this year, as it surpassed the 29.9% selloff in Boeing Co.’s stock BA, -0.07%.
In comparison, the Global X Autonomous & Electric Vehicles ETF DRIV has slipped 1.1% this year and the S&P 500 has gained 8.5%.
Even with the recent underperformance, Langan sees multiple headwinds in the company’s future, including the potential for more pressure on volumes since price cuts don’t seem to be as effective as they once were.
Langan also wonders if the company’s next big vehicle — the Model 2 expected out in the second half of 2025 — will live up to the hype given competition in its target market and the possibility of launch delays.
He cut his price target on the stock to $125 from $200, with the new target implying the potential for 28% downside from current levels.
But Tesla’s stock found a defender elsewhere, as Wedbush analyst Dan Ives did his best to support the electric-vehicle giant by saying negative investor sentiment is “way overdone.”
Ives said the current bearish narrative is similar to those seen a number of times over the years, when doubters ended up getting proven wrong after saying that Tesla’s time to shine was over and EVs were just a fad. And while Ives said EV demand has clearly moderated, he expects sales and profitability to improve in the coming quarters.
“Now is not the time to throw in the towel on Tesla…we have a high level of conviction at current levels despite the dark black clouds forming,” Ives wrote in a note to clients.
Wedbush’s Ives reiterated his buy rating on the stock and his $315 price target, which implies about 84% upside from current levels.
Ives is part of the minority on Wall Street, as only 18 of the 50 analysts surveyed by FactSet who cover Tesla are bullish. Meanwhile, 23 are neutral and the number of bears increased to nine with Langan’s downgrade.
Ives acknowledged that the EV price wars in China are “brutal,” but he said there is a sense that many price cuts are starting to subside into the spring and summer, which is good news for both Tesla and the EV industry.
He said demand is “sluggish” for the first quarter and the “noise” around Chief Executive Elon Musk’s $56 billion compensation package is a negative overhang on the stock. However, Ives wrote, “the stock is way overshooting on the negative front as the demand story for Tesla is more in stabilization mode heading to the rest of 2024, price cuts are moderating, battery costs/production is showing strong cost efficiencies, and a Model 2 (sub $30K vehicle) is on the roadmap for the next year.”
He said the stock’s risk-versus-reward profile is “extremely compelling” at current prices. Ives envisions a valuation for Tesla exceeding $1 trillion, compared with the current market cap of $565.4 billion, as the artificial-intelligence and full-self-driving programs are making “major strides” at the company.
Fuente de nota e imagen: https://www.marketwatch.com/story/teslas-stock-selloff-is-way-overdone-as-ev-demand-stabilizes-analyst-says-48441167