On the 16th (local time), Intraday Below $500 Billion
Sales Performance Slowdown Forecast and Workforce Reduction at Business Sites as Negative Factors
Shares of U.S. electric vehicle maker Tesla continued to decline on the 16th (local time), with its market capitalization briefly falling below $500 billion (approximately 700 trillion won) during intraday trading. This is interpreted as a negative factor following the announcement of a 10% workforce reduction the previous day amid forecasts of a slowdown in Tesla's sales performance this year.
On the New York Stock Exchange that day, Tesla's stock closed at $157.11, down 2.71% from the previous session. Based on the closing price, the market capitalization was about $500.3 billion. However, during the morning session, Tesla's stock price dropped about 5%, causing its market capitalization to fall below $500 billion. This is the first time in about a year since April 26 of last year that Tesla's market cap has dipped below $500 billion.
The main reason for Tesla's stock price weakness is attributed to poor earnings outlooks. Tesla's stock has been declining since January when CEO Elon Musk stated that "this year's sales growth rate will be significantly lower than last year's." The stock has fallen about 37% so far this year. Market capitalization has evaporated by $290 billion (approximately 400 trillion won) over the past three months.
In particular, Tesla's first-quarter deliveries (386,810 units) announced earlier this month fell far short of Wall Street expectations, followed by news of a workforce reduction of more than 10% across global operations the previous day, which dealt consecutive blows to the stock price. Tesla's stock fell 5.6% in a single day. On the 5th, major foreign media reports that Tesla would abandon production of low-cost electric vehicles further deepened investor concerns. However, CEO Musk denied these reports.
According to Bloomberg News, Ryan Brinkman, an analyst at JPMorgan Chase & Co., said, "The large-scale layoffs announced yesterday leave no doubt that Tesla's delivery decline is the result of demand slowdown rather than supply issues." Doug Clinton of asset management firm Deepwater pointed out, "Questions about electric vehicle demand, which have occasionally surfaced over the past few quarters, are being raised again."
U.S. economic media CNBC, citing financial information provider FactSet data, reported, "Eighteen Wall Street analysts have lowered Tesla's target price this month, and none have issued an upward outlook." It added, "Investor anxiety is also growing as CEO Musk's attention is divided among multiple companies such as X (formerly Twitter), SpaceX, and xAI, while two senior Tesla executives, including Chief Vice President Drew Baglino, have left the company."
Meanwhile, market attention is focused on Tesla's first-quarter operating results and CEO Musk's conference call remarks scheduled for release on the 23rd. Wedbush Securities analyst Dan Ives said, "Musk needs to present to investors the rationale for Tesla's cost-cutting, future strategy, product roadmap, and overall vision. Otherwise, many Tesla investors may stop accompanying the company."
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