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Tesla’s Tumble Obliterates Half of Meteoric 2020 Rally

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(Bloomberg) — Tesla shares plunged Tuesday as reports of plans to temporarily halt production at Tesla’s China factories reignited concerns over demand risks, pushing it to its longest streak since 2018. accelerated.

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Shares of the Elon Musk-led company fell 8.3% to $112.88, its seventh consecutive day of declines. Electric car maker Tesla’s market valuation has shrunk to about $357 billion, trailing Walmart, JP Morgan his Chase and Nvidia. This recent plunge will see Tesla lose its place among the top 10 companies in his S&P 500 index. , a distinction it has held since joining the benchmark in December 2020.

News of production cuts in Shanghai slumped demand after last week’s report that Tesla was offering US consumers a $7,500 discount to deliver its two highest-production models by the end of the year. There are growing concerns that These concerns reflect significant risks for Tesla, whose valuation rests on its future growth prospects.

Roth Capital Partners analyst Craig Irwin said, “Most of the weakness in the stock price this year is due to indicators of weak global demand. Tesla’s estimated earnings growth is “although still surprising.” , isn’t as amazing as a market valuation of $385 billion,” he said, referring to last weekend’s value.

On average, analysts expect revenue growth of 54% in 2022 and 37% in 2023, according to data compiled by Bloomberg.

In a future dominated by electric cars, the expectation that Tesla will become the leading electric car company will send its stock price soaring eightfold in 2020, earning a spot in the S&P 500 and, at one point, becoming the fifth most valuable company in the United States. became a stock of gauge.

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But this year, the rewind is just as fast. Amid Musk’s hijacking of Twitter and the distractions associated with it, investor fears about growth assets, and more recently, concerns that high inflation and rising interest rates could dampen consumer enthusiasm for EVs, that It has lost about two-thirds of its value.

“The company’s market share has peaked, and its over-reliance on China for profits and fears of factory closures are weighing on its stock,” said Jeffrey Osborne, an analyst at Cowen. Tesla “relies on promotions to move cars, and with delivery lead times of one to two weeks in much of the world, it appears to have exhausted its backlog.”

Wall Street analysts began issuing warnings about EV demand earlier this month, with Tesla’s 12-month average price target down 10% since the end of November. Meanwhile, the average adjusted earnings forecast for 2022 is down more than 4% from just three months ago.

Tesla has seen nearly $700 billion in shareholder value evaporate this year. The crash is one of the biggest contributors to the S&P 500’s decline in 2022, after Amazon.com, Microsoft and Apple.

Still, analysts’ overall stance on Tesla remains bullish, with the highest share of buy or equivalent valuations since early 2015.

Canaccord Genuity analyst George Gianarikas wrote in a note last week: He added that 2023 may see a “green sprout” of recovery.

(Updates stock price movement, adds Jeffries comment in 8th paragraph.)

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