tesla (TSLA) stock has had a rough start to 2024, dropping more than 35%. The stock is now down nearly 50% from its 52-week intraday high of $299.29, set in July 2023. What is the cause of the decline?
The decline in Tesla stock was driven by multiple factors, including the company's failure to report sales and bottom line results in its fourth-quarter earnings report and a very weak first-quarter delivery performance.
Tesla stock took a hit earlier this year after lower-than-expected financial results.s For the fourth quarter, Revenue increased by just 3% year over year..
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According to Reuters, Tesla recently reported its first quarterly shipments in nearly four years, and the situation doesn't seem to be improving in the new year. The company plans to release its full first quarter financial results after the close of trading on April 23rd.
Amid the troubles facing Tesla, the company announced earlier this week that it would lay off more than 10% of its global workforce.
“As we prepare the company for its next phase of growth, we are implementing new initiatives to reduce costs and increase productivity,” Tesla CEO Elon Musk said in a company-wide email obtained by Electrek. “It's really important to look at all aspects of the company.” “As part of this commitment, we have overhauled our organization and made the difficult decision to reduce our workforce by more than 10% globally. There is nothing worse than this, but this has to be done. This allows us to be lean, innovative and hungry for the next stage of growth. ”
Following reports of layoffs, two Tesla executives, Drew Baglino and Rohan Patel, announced their departures on Platform X, formerly known as Twitter.
The report of layoffs comes less than two weeks after Elon Musk posted that Tesla would unveil its long-awaited robotaxis on August 8th. The robotaxi launch is a major driver of Ark Invest CEO Cathie Wood's $2,000 price target for Tesla.
“ARK believes that the robotaxi platform should allow Tesla to generate profits from both vehicle sales and recurring ride-hailing revenue streams, which could generate software-like profits,” ARK said. This is stated in the evaluation model. “As Elon Musk has said, self-driving ride-hailing will 'probably be the biggest increase in asset value in history.'”
What is the takeaway for investors?
The issues Tesla faces are not significant, but they are a headwind in the short term. The launch of robotaxis, increased adoption of fully self-driving (FSD) technology, and expansion of electric vehicle (EV) charging infrastructure are likely to boost stock prices over the long term, so investors should assess their risk appetite and You need to decide whether it is appropriate. I want to stay there for everything to unfold or move on.
Analysts are currently on the sidelines. Consensus forecasts for stocks tracked by S&P Global Market Intelligence are currently on hold. Still, the average price target of $192.72 implies an upside of about 23% from today's levels.
