Wednesday, December 6, 2023

Tesla erases $145 billion in valuation on demand woes

Must read

SAN FRANCISCO: Tesla Inc. shares have wiped out nearly one-fifth of their value in less than two weeks amid growing concerns that demand for electric cars is starting to weaken.The selloff started earlier this month when the electric-vehicle giant dialled back growth expectations during its third quarter earnings call. That was followed by grim commentary from several global automakers, as well as Wall Street analysts. This week, battery-maker Panasonic Holdings Corp. and chipmaker ON Semiconductor Corp. also sounded alarms for the EV industry.

The warnings have weighed on stocks across the US automotive sector, which has also been battling extensive negotiations with its labour unions over wages. Still, Tesla’s decline stands out: shares have sunk over 17% since the Oct. 18 report, compared to a 2.8% drop in the S&P 500 Index, and a 3.4% decline in the Nasdaq 100. The retreat in the EV-maker’s stock price has erased about $130 billion from the company’s market capitalisation.

“At the crux of the problem is a capital-intensive sector investing in unproven EV strategies amid a world of rising costs, lower prices, rising rates and slower demand,” Morgan Stanley analyst Adam Jonas said discussing the wider industry weakness Tuesday. “What investors seem to be waking up to today is the idea that the tens of billions of dollars invested in EVs may be value destructive rather than value accretive.”

Source link

More articles

Leave a Reply

Latest article