The thunderous roar of Tesla, Inc.’s stock market engine fizzled as it dropped nearly 6% in the pre-market following lackluster delivery figures for the electric vehicle (EV) juggernaut’s first quarter. Tesla churned out an impressive 433,000 vehicles but only managed to deliver 387,000, falling short of market expectations. This shortfall casts a shadow of doubt over Tesla’s lofty valuation.
Although the delivered numbers were below the FactSet consensus of 457,000, they also trailed the 484,507 vehicles dispatched in the last three quarters of 2023 and the 422,875 deliveries in the first quarter of that same year. This downward trajectory is disconcerting for shareholders, especially as Tesla continues to witness a waning slice of the market pie in China. Data from April 1, 2024, revealed that Tesla’s March sales in China marginally rose by 0.2% year-over-year, selling 89,064 vehicles.
In contrast, the Chinese EV market surged by nearly 33%, with BYD emerging as the top dog by selling over 300,000 vehicles, marking a hefty 46% year-over-year increase. Tesla’s struggle in China paints a picture of an industry under pressure.
Industry Challenges Mount
Tesla’s woes are not standalone – the EV market faces headwinds as supply saturates demand. While Tesla may appear overinflated, it’s akin to a palatial mansion standing amidst a dilapidated neighborhood. The company’s prowess lies in its scale of vehicle deliveries and its profitability, rare feats in a sector grappling with challenges.
As competition heats up, Tesla finds itself not just contending with rivals in China but also on home turf. Shifts in consumer preferences towards hybrid vehicles are favoring the likes of Toyota Motor Corp., whose stock has soared by 32% in 2024 and by 70% in the last twelve months. Moreover, Tesla’s offerings are starting to appear antiquated against a backdrop of cutting-edge features from competitors, although the actual execution of these visions remains uncertain.
Navigating the Buy Zone
Beyond crafting EVs, Tesla plays a pivotal role in the EV infrastructure and reigns as a leader in EV charging stocks. This underpins a fundamental truth – Tesla is here to stay. Yet, the looming question remains: Is Tesla’s stock a viable investment amidst its current turmoil?
With its latest slump, TSLA stock teeters near its 52-week low, attempting to cling onto support. However, the broader market downturn and apprehensions surrounding the impending earnings report on April 17 suggest that the correction may be far from over. Elevated short interest, up over 6% in the past month, adds weight to the argument that TSLA stock could plummet close to its five-year low around $112 per share. Such a nosedive would translate to a harsh 32% discount from its current price and a staggering 80% plunge from its 52-week zenith.
Source: This article first appeared on MarketBeat.