Shares in Tesla experienced a sharp decline of up to 11% as the market opened, resulting in a staggering $73 billion reduction in the company’s market value. This plunge came shortly after Tesla issued a warning about the deceleration in growth of electric car sales and the looming threat from Chinese competitors, as reported by CNN.
During an earnings presentation on Wednesday, the world’s most valuable automaker disclosed that its sales growth for the current year “may be notably lower” than the previous year, citing a focus on developing the “next-generation” vehicle, likely a more affordable model. Despite achieving a substantial 38% increase in deliveries in the past year compared to 2022, Tesla fell short of its earlier target of sustaining a 50% annual growth rate over several years.
The financial results for the last quarter added to the disappointment, with adjusted earnings per share plummeting by 40% from the previous year. Although revenue showed a 3% increase, surpassing $25 billion, it still fell below market expectations.
This marks the second consecutive quarter where Tesla missed analysts’ earnings forecasts, following a series of better-than-expected results since the beginning of 2021. Despite doubling in price throughout 2023, Tesla’s shares faced a challenging start in 2024, already witnessing a 16% decline before the latest earnings report. Currently, the stock is trading at its lowest level since April of the previous year, as reported by CNN.
Thursday’s intraday losses were comparable to a significant 11.4% fall in late December 2022, when concerns about Tesla’s sales, profitability outlook, and the overall health of the U.S. economy troubled investors.
