Tesla’s stock heads for fourth day of losses – and volatility could persist
In Short:
– Tesla’s stock has fallen more than 11% since the start of the year, as the electric-vehicle maker faces challenges in China and Germany.
– The company reportedly cut prices on its Model 3 and Model Y vehicles in China, where it competes with local rivals such as BYD and Nio.
– The company also temporarily halted production at its plant near Berlin due to a lack of components caused by the armed conflicts in the Red Sea.
– Analysts say that Tesla’s stock is likely to remain volatile in the near term, but the long-term outlook is still positive.
In Details:
Tesla Inc. (TSLA) has seen its stock price drop for the fourth consecutive day on Friday, as the electric-vehicle maker grapples with various headwinds in its key markets.
The company has reportedly reduced prices on its Model 3 sedan and Model Y sport-utility vehicle in China, where it faces stiff competition from local players such as BYD Co. Ltd. (CN:002594) and Nio Inc. (NIO). China is the world’s largest EV market and a crucial growth driver for Tesla, which has a factory in Shanghai.
According to Reuters, Bloomberg News and social-media accounts tracking the automaker, Tesla cut the starting prices on its Model 3 by 5.9% and its Model Y by 2.8%. The move comes as China’s economy struggles to recover from the pandemic, with consumer prices falling for the third straight month in December.
Tesla also faces geopolitical challenges in Europe, where it is building a factory near Berlin. The company said on Thursday that it would temporarily halt the majority of its production there due to a lack of components.
The company blamed the disruption on the armed conflicts in the Red Sea, which have affected the transport routes between Europe and Asia via the Suez Canal¹. The Red Sea is a vital shipping lane for global trade, but it has been under attack by Yemen’s Houthi rebels since the start of the Israel-Hamas war in October.
Tesla’s stock has fallen more than 11% since the start of the year, and has seen only one positive session since Dec. 28. The stock closed at $1,021.06 on Friday, down 3.4% from the previous day.
Analysts say that Tesla’s stock is likely to remain volatile in the near term, as the company faces uncertainty and competition in its key markets. However, they also say that the long-term outlook for the company is still bullish, as it continues to innovate and expand its product portfolio.
Piper Sandler analyst Alexander Potter wrote in a note that “most of this ‘noise’ has little bearing on the long-term thesis” and that Tesla is “more volatile than many other stocks in our coverage”. He maintained his overweight rating and $1,200 price target on the stock.
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