It’s fair to say that Tesla (NASDAQ:TSLA) stock has had a pretty awful 2024 to date. As I type, the electric car maker has slumped 42% in value and now sits at a 52-week low. Is there worse to come?
I wouldn’t rule it out.
What’s going on?
The appalling year-to-date performance, while arguably extreme, isn’t hard to fathom.
Since disappointing the market with Q4 numbers, the Austin-based business has been cutting prices left, right and centre. This is fine if the demand is there. However, electric vehicles sales have slumped in light of the cost-of-living crisis and the $445bn firm has faced increasingly stiff competition from Chinese rivals.
Many commentators have also voiced their concern about Elon Musk’s recent announcement that the company is working on developing a self-driving ‘robotaxi’ rather than a low-cost EV (the Model 2). Hitherto, the latter has been one of the key arguments for backing Tesla and the EV revolution in general.
On top of this, all of the firm’s Cybertrucks sold since being released have been recalled due to concerns over faulty accelerator pedals.
When it rains, it pours.
Look out below!
There’s certainly an argument for saying that things could get even nastier for Tesla holders. And soon. Later today (Tuesday), the one-time stock market darling will release its Q1 earnings statement.
To be clear, we know things won’t be great. Last month, it was revealed that deliveries of vehicles in the quarter were 13% down on the number expected by the market.
For what it’s worth, the consensus among analysts is that revenue will come in at just over $22.3bn. Should this prove to be the case, it will the first top-line dip in four years.
Priced in?
There is, of course, an argument for saying that investors have already got used to the bad news. In this scenario, any chink of light will be seen (very) positively.
I reckon a lot comes down to perceptions of Elon Musk and his vision for the company. The fact that Tesla’s CEO has cancelled a trip to India to be at the helm when the numbers drop is either comforting or worrying, depending on your point of view.
In the past, Musk’s behaviour during earnings calls has often caused more headlines than the actual figures coming out of the company. But if he does pull a veritable rabbit out of the hat, the shares could soar. Let’s not forget that emotions drive share prices in the short term, not fundamentals.
One to watch
Regardless of what happens in the next 24 hours, it will be interesting to watch.
But that’s all I’ll be doing. Trying to anticipate the (exceptionally) near-term behaviour of any share price with the intention of buying or selling is not Foolish. We believe in compounding wealth over the long term. It’s boring, yes. But it works.
For this reason, I’m happy with my exposure to Tesla via my admittedly big Stocks and Shares ISA holding in Scottish Mortgage Investment Trust. Sure, I’ll be kicking myself if the former goes on to shoot the lights out from here. But maintaining a diversified portfolio allows me to sleep at night.
For those holding directly, I wish them well. For everyone else, I think it’s time to grab the popcorn.
