- Tesla’s stock has had a rough start to 2023 even after a terrible year where it cratered 65%.
- The EV maker faces slumping demand in China and elsewhere, as well Elon Musk’s Twitter saga.
- Here’s what Paul Krugman, Jeremy Siegel, Cathie Wood and others think is happening — and what it means for shares.
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Tesla’s stock is off to a bad start this year after suffering a terrible 2022, as the sheen increasingly appears to be rubbing off Elon Musk’s once-dentproof automaker.
Its shares dropped over 12% on the first trading day of the new year, after the electric-vehicle company missed its targets for deliveries in the fourth quarter.
The latest declines add to Tesla’s unprecedented 65% tumble in 2022, when it lost more than $900 billion of its market value from peak to trough. In December alone, the stock plummeted 40%.
That slump followed CEO Musk’s takeover of Twitter, as shareholders worry his new acquisition is distracting him from Tesla. At the same time, the carmaker is grappling with a decline in demand, tighter US rules on EV credits, and a production slowdown in Shanghai as worker COVID-19 infections rise.
Here’s what eight Wall Street experts and influential market voices have to say about what’s happening at Tesla — and with its stock.
Paul Krugman, Nobel economist: Musk’s MAGA backing is a marketing mistake
“Tesla, then, is a brand whose customer base largely consists of wealthy cultural liberals who were attracted in part by Elon Musk’s perceived with-it persona,” Krugman wrote in a New York Times op-ed.
“Given all that, Musk’s public embrace of MAGA conspiracy theories is an almost inconceivably bad marketing move, practically designed to alienate his main buyers.”
Musk has weighed in a lot on politics since buying Twitter, and experts say he’s empowered right-wing viewpoints.
Jeremy Siegel, Wharton professor: Tesla’s valuation is too high
“The problem with Tesla was always the price, and I think that’s the bottom line,” Siegel said, referring to the EV maker’s valuation — a calculation of how much the company and its stock is worth.
Its valuation peaked at a forward price-to-earnings ratio of 180 times in late 2021, the year it started producing profits. It’s currently trading at about 25 times, its lowest ever.
“Every stock that was sent up over 50 times earnings performed extremely poorly in the future. It’s the price, it’s not the company, that causes investors problems,” Siegel said.
Cathie Wood, CEO of ARK Invest: Tesla will tempt customers back with price cuts
Musk fan Wood said Tesla’s stock has “miles to run” and could rise to $1,500 in the next five years.
“I think there are people who won’t buy his cars now,” she said in a Barron’s interview, going on to refer to price cuts on Tesla’s models.
“But if he does what we think he’s going to do on the cost side, there are a lot of people who will use economics as their guide … and I think there are a lot more of those people than there are of the naysayers around Twitter.”
Dan Ives, Wedbush analyst: Musk must lay out these 3 things
“Very simply, this a fork-in-the-road year for Tesla, that will either lay the groundwork for its next chapter of growth or continue its slide from the top of the perch, with Musk leading the way downhill,” Ives said in a note as he set a $175 price target.
“However, now Musk & Co. needs to lay out: 1) hittable 2023 target and delivery numbers with stable margins, 2) stop selling stock and document this on the next earnings call, and 3) finally name a new Twitter CEO so the distraction/attention risks around Tesla start to abate.”
Edmunds analyst Ivan Drury: It’s clear Tesla’s just another car company
Tesla once struggled to meet demand, but is now using typical industry tricks to deal with inventory problems, according to Drury.
“These are all very normal problems, but the difference is Tesla was the one breaking all the rules,” he told Insider. “Now we’re seeing them fall into these same traps all the automakers go down.”
The analyst believes Tesla will cut prices further. “This is a company that raced to be different. But now it seems like they’re going to be the same as everyone else,” he said.
Vanda research analyst Marco Iachini: Individual investors are dumping the stock
“We are seeing the first signs of retail exhaustion in TSLA,” Iachini said in a weekly update.
When Tesla’s stock rose on Wednesday, individual investors failed to pile in. “Subdued buying indicates that a significant share of retail traders seized yesterday’s rebound to exit TLSA positions,” he said.
Individual investors bought more Tesla stock in the past six months than in the five years before — so the recent selloff has hit hard. “This group is definitely feeling the pinch of the recent months’ fall to $113/sh,” he said.
Morgan Stanley strategist Adam Jonas: Bet on Tesla to win the EV race
“Between a worsening macro backdrop, record high unfavorability, and increasing competition, there are hurdles to overcome. Yet we do believe that in the face of all these pressures, Tesla will widen its lead in the EV race, as it leverages its cost and scale advantages to further itself from the competition,” Jonas said in a note.
Fundstrat strategist Mark Newton: Too early to call a bottom
“We’re all on board, or most of us, on what Musk is trying to do,” Newton said in a CNBC interview.
“Clearly the stock has come a long way down in a very short period of time. I just view it as being a very risky time to step in and buy just yet for those with short time frames,” he added.