Tesla is the biggest S&P 500 loser this year, down even more than Boeing
Elon Musk is CEO of Tesla.Bartosz Siedlik/AFP/Getty Images
Tesla’s 2024 is not going so well.
The electric carmaker’s shares have plummeted more than 30%, erasing about $230 billion of value.
Slowing sales could continue to drag on Elon Musk’s company, according to analysts.
Tesla began the year as the newest member of the “Magnificent Seven” group after its stock racked up triple-digit gains in 2023.
Close to three months later, the electric carmaker holds a much less enviable title — it’s the S&P 500’s biggest loser year-to-date.
Tesla shares have plummeted about 30% year-to-date, wiping about $230 billion off the company’s value.
The losses mean it’s even lagging crisis-hit planemaker Boeing, which has tumbled almost 29% after a blowout on an Alaska Airlines 737 MAX fueled investors’ fears about safety issues.
The gap was even wider at the end of last week, but Tesla shares were up almost 6% on Monday.
Signs of an EV sales slowdown have fueled the Tesla sell-off.
Elon Musk’s company lost its crown as the world’s top EV seller to upstart Chinese rival BYD last year, and there are signs that demand for its cars is weakening both in the US and elsewhere.
That’s created a narrative of Tesla not being able to live up to its reputation of being a high-growth stock loved by both retail and institutional investors, according to Morningstar analyst Seth Goldstein.
“It’s supposed to be a high-growth stock, and the short answer is that this year it looks like it won’t be that high growth,” Goldstein told Business Insider. “When growth there is slowing, we tend to see a big reaction from the market.”
First-quarter results
The next milestone on the horizon for Tesla is likely to come on April 17, when company is expected to report its earnings for the first three months of 2024.
Analysts expect it to post earnings of 57 cents per share, according to a poll by Refinitiv, which would represent a sizable slowdown from the final three months of 2023.
Those results are likely to be a make-or-break moment when it comes to how Tesla is perceived on Wall Street, Goldstein said.
“The first quarter results are going to be very telling for Tesla for the rest of the year,” he told BI. “If we see that deliveries are very flat, the stock could slide further as the market starts to assume the growth story is broken.”
It’s no surprise that a company known for eliciting strong opinions from investors still has its fair share of backers.
CFRA analyst Garrett Nelson has slapped a $275 price target on the stock, almost $100 higher than its current level.
“We kind of view Tesla as the best house on a bad block in the Western market, you know, looking at North America and Europe,” he told Fox Business last week.
Nelson also believes Tesla could become the world’s biggest auto manufacturer — but others don’t share his optimism.
Last week, Wells Fargo analysts downgraded the stock to a price target of $125, labeling it as a “growth company with no growth.”
Musk-shaped problem
Tesla is still trading at 55 times its forward earnings — meaning it still looks overvalued compared to the average Magnificent Seven stock despite its slide this year.
Some shareholders have even started to imply that Musk might be part of the problem.
Longtime investor Ross Gerber slammed the Tesla chief last week, saying it might be time for a “real CEO who’s actually going to help the company” to replace him.
The world’s third-richest man has already seen his personal fortune plummet $50 billion this year due to Tesla’s slumping stock price — so he’ll have more skin in the game than anyone else if it can’t change perceptions on Wall Street soon.
