Wall Street Lowers First Quarter Earnings Forecast
Market Capitalization Plummets by 130 Billion Dollars in a Day
U.S. electric vehicle company Tesla's stock price recorded its largest drop in about 4 years and 6 months. The stock price, which surged after Donald Trump was elected U.S. president last year, has returned to its original level.
On the 10th (local time) at the New York Stock Exchange, Tesla closed at $222.15, down 15.43% from the previous session. During the day, it briefly plunged to $220.00.
The daily drop was the largest since September 8, 2020, when it fell 21.06%. The market capitalization based on the closing price was $714.6 billion, evaporating $130.3 billion from the previous session.
Tesla's stock price, which was $251.44 on November 5 last year, rose to an all-time high of $479.86 on December 17 after Trump’s election, as Elon Musk, Tesla’s CEO who led the election campaign, gained increasing political influence. Since then, Tesla's stock price has continuously declined, returning all the gains made after Trump's election as of this day.
This plunge appears to be influenced not only by the intensifying tariff war and recession concerns hitting the U.S. stock market overall but also by global consumer backlash against Tesla. According to Bloomberg News, on this day Wall Street’s UBS Group lowered its sales forecast for Tesla’s first quarter. UBS stated, "While the new release of the Tesla Model Y is expected to help sales, orders are somewhat sluggish," and lowered the first-quarter sales estimate by 16% to 367,000 units.
This reflects the sharp decline in Tesla’s sales performance in various overseas markets recently. In Germany, the largest market in Europe, Tesla new car registrations in January and February dropped about 70% compared to the previous year, and last month, shipments from Tesla’s Shanghai factory decreased by 49%, marking the worst monthly performance since July 2022.
Additionally, protests opposing CEO Musk’s political activities, along with arson and shootings targeting Tesla vehicles, stores, and charging stations, have been occurring daily. In particular, news was reported that on the morning of this day, four Cybertrucks were simultaneously burned in a parking lot in downtown Seattle where new Tesla cars were stored.
Ben Kallo, a researcher at Robert W. Baird & Company, explained in an interview with U.S. CNBC on this day that a series of incidents targeting Tesla could discourage consumers considering purchasing Tesla vehicles, negatively impacting Tesla’s performance. He said, "When people see their cars being scratched with keys or set on fire, even those who support Musk or are indifferent will reconsider buying Tesla."
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