Tesla Inc. (NASDAQ: TSLA) stock is a seesaw. It hit $235 in late 2020 but dropped to $193 in April 2021. It jumped to $407 at the end of that year, then slid to $113 in early 2023. The share price took another run to $281 in July last year. It has jumped up and down since then and now trades near $187. That’s a decline of 24% since January 2.
The most recent sell-off could be due to several reasons. For certain, one is fourth-quarter revenue and the forecast for 2024. Revenue rose only 3% from the fourth quarter the year before to $25.2 billion. Per-share earnings fell 40% to $0.71. Tesla management said 2024 would be slow and investors should expect slow growth. This was a comedown from 2023, when unit sales rose 35% to 1.81 million. (See the 15 worst-selling electric vehicles last year.)
Electric vehicle (EV) sales across the industry are slowing. Ford announced EV sales in January were only a few thousand. Ford and GM have both put off EV expansion plans that were supposed to include investments of billions of dollars.
Car companies have started to discover that more people want hybrids than EVs. Hybrids at least have a small gasoline engine. So, a battery that might take an EV only 300 miles is not a problem. Charging time is not a problem either. And the availability of chargers is not as much of a hurdle.
Many experts believed EVs were the wave of the future. The Biden administration set a goal that 50% of all new car sales would be EVs by 2020. Car companies were ramping up production to get there.
Tesla’s Path to Recovery
Source: jurvetson / Flickr
Tesla has several paths to a share price recovery. One is its new Cybertruck, an electric pickup. Full-sized pickups are the most popular vehicles in America. An EV version can at least get a modest amount of those sales. Tesla says it has a large backorder for the Cybertruck.
Tesla does have 50% of the EV market in the United States. Some of this might have come from price cuts. Nevertheless, if it can hold or grow that market share, the company will show investors it has been able to fend off competitors.
Finally, slow EV sales may recover. The theory that drivers would turn to EVs may have expected this to happen quickly. The movement may only be delayed as charging station availability and battery range improve.
Tesla has a chance to bounce back and more than one road to get there.
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