Elon Musk, CEO of Tesla. Antonio Masiello/Getty Images
Things haven't been this bad for Tesla Inc. investors in a long time.
Shares of Elon Musk's electric vehicle giant have fallen 26% this month, losing $205 billion in market value. The stock is on track to close lower for the sixth straight week, its longest losing streak since 2016. For comparison, at that point, Tesla hadn't even launched its first mass-market car, the Model 3.
“There is no near-term floor for this stock,” Adam Sarhan, founder and CEO of 50 Park Investments, said in an interview. “Investors are puzzled. If Tesla lowers its guidance and is not bullish in the near term, why should investors be bullish?”
There are many reasons for the sell-off. The auto industry is warning of a collapse in demand for electric vehicles. Hertz Global Holding Inc., the rental car giant, pulled back from plans to expand its electric vehicle fleet, and Ford Motor Co. said it sees a weaker market for it.
Meanwhile, Tesla implemented several price cuts, sparking fears about falling margins. Then came its fourth-quarter earnings report on Wednesday, in which the company said it expects a “significantly lower” growth rate in 2024, but gave no further details. The stock plummeted on this news.
Bulls get out
Since then, at least two analysts have downgraded the stock, while several have lowered their price targets on the stock. According to data compiled by Bloomberg, the average price target for Tesla has fallen nearly 8% since Tuesday's close and now stands at $220.34. Shares are trading at around $185.
Longtime bullish Tesla analyst Daniel Ives of Wedbush has removed the stock from his “Best Ideas List,” saying the lack of details on the company's price cuts, outlook and demand is “a bitter pill for bulls to swallow.” Ives continues to rate the stock as a Buy, but also lowered his price target.
The stock could remain in flux for a while, considering Tesla's reluctance to provide a roadmap and the EV winter expected to ravage the entire industry this year.
“Tesla’s December results and outlook effectively pushed back the positive inflection point in the business by a year,” said Gene Munster of Deepwater Asset Management. “Now it looks like the second half of 2025 is coming before revenue growth accelerates. In the short term, stocks are likely to trend lower in a vacuum of good news.”
Still, this month's sharp drop could also open the door to a quick recovery for a stock that can move powerfully in either direction once sentiment changes. Technical signals indicate that the stock has fallen into “oversold” territory, which typically signals an impending trend reversal.
The sharp decline “in less than a month has taken it to oversold levels exceeded only once since the IPO,” Matt Maley, chief market strategist at Miller Tabak + Co., wrote in a note Friday. “This stock may have to fall further before hitting its ultimate bottom, but the likelihood that it will see a near-term rebound is quite high.”