Electric car maker Tesla, Inc. (TSLA) shares fell as much as 10% to $858.83 on the morning of January 24, pushing shares of most electric vehicle (EV) makers down. Tesla competitor Rivian Automotive, Inc. (RIVN) fell to a 52-week low below $60 a share, while Nikola Corporation (NKLA) fell 10% from its January 21 closing price to $6.70 before recovering.
According to Wedbush Securities analyst Dan Ives, "Lack of profit, chip shortage issues and a host of production issues have cast a dark shadow on the [electric vehicle] sector." In an email to CNBC, the analyst continued, "With this market risk averse, EV startups find themselves on the wrong side of this market storm, execution now is key to building credibility on the Street one brick at a time."1
At the time of writing, Tesla is trading at $888.40, down about 6% from the start of the day, while Nikola and Rivian are down 7.6% and 4.6% from their opening prices.
Why is Tesla falling?
While other EV makers haven't been profitable and are still getting their bearings on the market, Tesla is a veteran. Record deliveries and the Biden administration's decision to make electric vehicles a key part of its climate change agenda have caused its stock price to skyrocket during the pandemic. Investors eager to get in on the EV action poured money into Tesla shares and helped the company surpass its trillion-dollar valuation.
However, the stock has reversed its trajectory in 2022. Tesla's stock price is down about 24% since the start of the year, even as the company reported record deliveries and analysts posted glowing letters of recommendation.
But the car company will still have to deal with a plethora of technical selloffs in the markets. Nasdaq is in the midst of a historic selloff, after falling into correction territory. 2 Investors are liquidating their portfolios and getting rid of speculative plays. This list includes stocks that are expected to have promised earnings in the future.
Tesla is an example. While the EV market has received a legislative boost in recent times, it has yet to pick up steam to compete on an equal footing with gasoline cars. For example, electric vehicles comprised just 7% of the global market for automobiles during the first half of 2021.3. Interest rate hikes by the Fed put Tesla investors off even more because they reduce the value of future earnings that are discounted back. Modeling is present in evaluation.
Should Tesla Investors Hit the Panic Button?
For long-term investors in Tesla stock, the current drop in its price may be a familiar script. The electric carmaker's stock has always been a volatile game, and the current drop in its price, although dire, isn't entirely unexpected.
Analysts say the car company will continue to dominate the EV industry of the future. For example, longtime Tesla bull Morgan Stanley issued a note saying that Tesla has no close challengers. "We believe that car companies and investors may need to rethink their EV strategies in terms of volume per SKU as we continue Tesla's model roll-out," the firm said. Of the 41 analysts covering the company, only 11.5 have a sell rating on the stock.5
His bullish thesis focuses on the company's fundamentals, that during the pandemic, Tesla opened factories, worked out workarounds for chip shortages that plagued the automobile industry, and record deliveries even amid the pandemic's problems at other car companies. Reported. Analysts have released bullish estimates for Tesla's performance when it reports earnings on Jan.
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