Tesla’s stock price plunged below $150 per share-mark, giving up all of the gains made over the past year as the electric vehicle (EV) major reels from falling sales and steep discounts intended to lure more buyers. Shares of the Elon Musk-owned company slid nearly four per cent in intraday trading Thursday, in what what now stands as the third worst week for the stock in 2024.
The Austin, Texas-based company’s shares are down 12.4 per cent this week and more than 39 per cent this year. Shares of Tesla Inc. last traded for $150 in January 2023. Additionally, Tesla employees have taken a hit as the EV major said that it is cutting 10 per cent of its staff globally– around 14,000 jobs.
The next day, Tesla announced it would try to re-instate Musk’s $56 billion pay package that was rejected by a Delaware judge in January, who said that the arrangement was dictated by Musk and was the product of negotiations with directors who were not independent of him, according to Associated Press.
Tesla shares hit an all-time intraday high of $415.50 in November of 2021, adjusted for a 3-for-1 stock split that took effect in August 2022. Tesla sales fell sharply last quarter as competition increased worldwide, electric vehicle sales growth slowed, and price cuts failed to draw more buyers.
The company said it delivered 386,810 vehicles from January through March, nearly nine per cent below the 423,000 it sold in the same quarter of last year. Dan Ives, an analyst with Wedbush who has been very bullish on Tesla’s stock, called the first quarter sales numbers an “unmitigated disaster.”
“For Musk, this is a fork in the road time to get Tesla through this turbulent period otherwise dark days could be ahead,” Ives wrote in a note to clients earlier this week. “With the ongoing debacle around margins and demand, Musk will need to quickly take the reins back in to regain confidence” of Wall Street.
Since last year, Tesla has cut prices as much as $20,000 on some models as it faced increasing competition and slowing demand. The price cuts caused used electric vehicle values to drop and clipped Tesla’s profit margins.
Other automakers also have had to cut electric vehicle production and reduce prices to move EVs off dealership lots. Ford, for instance, cut production of the F-150 Lightning electric pickup, and lopped up to $8,100 off the price of the Mustang Mach E electric SUV in order to sell 2023 models.
US electric vehicle sales growth slowed to 3.3 per cent in the first quarter of the year, far below the 47 per cent increase that fueled record sales and a 7.6 per cent market share last year. Sales of new vehicles overall grew 5.1 per cent, and the EV market share declined to 7.15 per cent, according to AP.
Tesla reports its full first-quarter earnings next week. In addition to the cuts that amount to about 14,000 jobs, Tesla this week announced the departure of two high-placed executives. Andrew Baglino, Tesla’s senior vice president of powertrain and energy engineering, is leaving after 18 years with the company. Rohan Patel, senior global director of public policy and business development and eight-year Tesla veteran, is also departing.
With agency inputs
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Published: 18 Apr 2024, 10:49 PM IST