Elon Musk: Tesla witnessed a sharp decline of over 8% after CEO Elon Musk cautioned that sales growth would decelerate in 2025. Musk highlighted that growth would be “notably lower” as Tesla shifts its focus to a more affordable, next-generation electric vehicle to be produced at its Texas factory in H2 2025.
Impact on Margins and Investor Concerns
Price cuts implemented by Tesla, intended to boost sales, have already impacted profit margins, raising concerns among investors. Analysts at TD Cowen observed that Tesla’s recent headlines have transitioned from bad to worse, particularly with Q4 revenue and profit falling below expectations.
Shares of Other EV Makers Also Slide
The repercussions extended beyond Tesla, affecting other electric vehicle (EV) makers. Companies like Rivian Automotive Inc, Lucid Group, and Fisker experienced stock declines ranging from 1.2% to 2.4%. The broader EV industry has been grappling with a demand slowdown for over a year, further intensified by Tesla’s price cuts.
Challenges for Tesla’s Sales Boost
Analysts pointed out challenges for Tesla in attempting significant sales growth, foreseeing potential declines in operating margins. Competition with Chinese company BYD in China and increased rivalry elsewhere contribute to the complexities faced by Tesla.
Market Response and Analyst Ratings
In response to Musk’s warning, at least nine brokerages downgraded Tesla’s stock, while seven raised their ratings. The stock, on average, holds a “hold” rating, with a median price target of $225, approximately 9% higher than the recent closing price.
Tesla Short Sellers Profit
Data from Ortex revealed that Tesla short sellers have gained $3.45 billion in profits in the early part of the year, marking it as the most profitable U.S. short trade. The cautionary note from Musk appears to have resonated with short sellers, contributing to Tesla’s market challenges.
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