Can Tesla investors expect darks days for Elon Musk's EV maker?

Tesla aimed usher new era of EV which has been clouded by China’s BYD

By
Business Desk
Elon Musk, CEO of Tesla, announced to lay off over 10% of the company’s workforce. — AFP/File
Elon Musk, CEO of Tesla, announced to lay off over 10% of the company’s workforce. — AFP/File

Billionaire and CEO Elon Musk’s electric vehicle EV maker has been in hot waters with its deliveries plunging, market capitalisation contracting, and share price falling considerably.

The turbulence in the company has not only baffled Tesla investors but also the market analysts.

The Texas-based automaker’s market cap is down over $700 billion with its share price nose-diving 63% after hitting an all-time high of $409 in November 2021, according to the estimates by Fortune.

For the first time this year, its market cap is under $500 billion.

Reports indicate that deliveries have also been low since Covid-19 ended, and recently the 52-year-old CEO announced in a memo to lay off over 10% of the company’s global workforce.

A worker prepares to park a Tesla electric car at a Tesla dealership on January 16, 2024, in Burbank, California. — AFP
A worker prepares to park a Tesla electric car at a Tesla dealership on January 16, 2024, in Burbank, California. — AFP

Analysing the bumpy ride, Wedbush Securities’ Dan Ives told CNBC while Musk deserves the large pay package, he is facing a “fork in the road period,” and needs to turn to change things.

"This is something that has gone from a Cinderella story to, in the near term, a horror show," Ives said.

The purpose of Tesla was to unfold a new era of EV but it has been reportedly clouded by the competition from China’s BYD.

Tesla’s stock was down 3.5% at about $149 Thursday.

Ives urged Musk’s company to showcase a clear strategy going forward, including a roadmap for future product launches, urging the carmaker to focus on its low-cost Model-2.

Deutsche Bank Thursday also downgraded Tesla stock from a buy rating to a hold rating, lowering its price target from $189 per share to $123.

Deutsche analyst Emmanuel Rosner wrote Tesla’s future is tied to “cracking the code on full driverless autonomy,” which represents a “significant technological, regulatory and operational challenge.”

"We view Tesla’s shift as thesis-changing, and worry the stock will need to undergo a potentially painful transition in ownership base,” Rosner wrote adding that EV investors may start "throwing in the towel" and be replaced "by AI/tech investors with considerably longer time horizons."