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It is fair to say that tesla (NASDAQ:TSLA) stock has had a pretty terrible 2024 year to date. As I write, the electric car maker's stock has fallen 42% and is now at its lowest level in 52 weeks. Are there worse things to come?
I wouldn't rule it out.
What is happening?
The terrible performance so far this year, while arguably extreme, is not difficult to understand.
Since disappointing the market with its fourth-quarter numbers, the Austin-based company has been cutting prices left and right. This is fine if there is demand. However, electric vehicle sales have plummeted in light of the cost of living crisis and the $445 billion company has faced increasingly tough competition from Chinese rivals.
Many commentators have also expressed concern over Elon Musk's recent announcement that the company is working on developing an autonomous 'robotaxis' rather than a low-cost electric vehicle (the Model 2). Until now, the latter has been one of the key arguments to support Tesla and the electric vehicle revolution in general.
In addition to this, all of the company's Cybertrucks sold since their launch have been recalled due to concerns about faulty accelerator pedals.
When it rains it pours.
Look down!
There's certainly an argument to say that things could get even uglier for Tesla owners. Etc. Later today (Tuesday), the former stock market darling will release its first quarter earnings statement.
To be clear, we know things won't be very good. Last month, it was revealed that vehicle deliveries in the quarter were 13% lower than the market expected.
For what it's worth, the consensus among analysts is that revenue will be just over $22.3 billion. If this turns out to be the case, it will be the first drop in revenue in four years.
Price included?
Of course, there's an argument to say that investors have grown accustomed to bad news by now. In this scenario, any ray of light will be seen (very) positively.
I think a lot of it comes down to Elon Musk's perceptions and his vision for the company. The fact that Tesla's CEO canceled a trip to India to be in charge when numbers dip is either comforting or worrying, depending on your point of view.
In the past, Musk's behavior during earnings calls has often made more headlines than the actual numbers the company releases. But if he pulls a real rabbit out of the hat, the stock could skyrocket. Let's not forget that emotions drive stock prices in the short term, not fundamentals.
one to watch
Whatever happens in the next 24 hours, it will be interesting to watch.
But that's all I'll do. Trying to anticipate the (exceptionally) short-term behavior of any stock price with the intention of buying or selling is not foolish. We believe in long-term wealth capitalization. It's boring, yes. But it works.
For this reason, I am happy with my exposure to Tesla through my large holding in the stocks and Shares ISA. Scottish Mortgage Investment Trust. Sure, I'll kick myself if the first one keeps shooting the lights out from here. But maintaining a diversified portfolio allows me to sleep at night.
To those who support directly, I wish you the best. For everyone else, I think it's time to grab the popcorn.
