Tesla CEO Musk's demand warning sparks selloff in EV stocks
By Aditya Soni and Akash Sriram
(Reuters) -Elon Musk's warning that high interest rates could sap electric-vehicle demand knocked shares of the sector on Thursday, with some analysts questioning if Tesla (NASDAQ:TSLA) can maintain the runaway growth that has for years set it apart from other automakers.
The world's most valuable automaker was set to lose nearly $50 billion in market value, based on premarket share movements.
Rivian (NASDAQ:RIVN) Automotive, Lucid Group (NASDAQ:LCID) and Fisker (NYSE:FSR) fell as much as 2.4%, while legacy automakers Ford Motor (NYSE:F) and General Motors (NYSE:GM) lost 1.4% and 1.1%, respectively.
The comments marked a change in tone from Tesla CEO Musk, who had said his company was «recession-resilient» last year. The EV maker missed revenue estimates on Wednesday by the most in more than three years despite hefty price cuts.
«It didn't have the same zip. We await Tesla's earnings calls with a sense of excitement and suspense — and they usually deliver. Not Wednesday night,» Canaccord Genuity analysts said.
The company is expected to cut prices further in the current quarter to meet its annual deliveries goal of 1.8 million vehicles, even after its gross margin contracted to 17.9% between July and September from 25.1% a year earlier.
«We continue to believe that Tesla is a car company, and that the competitive nature of the auto industry will make it difficult for any player to have a sustained profitability advantage,» Bernstein analyst Toni Sacconaghi said.
Overall, 10 analysts cut their price targets on the stock, pushing the median view to $260, according to LSEG data.
Tesla shares fell 6.1% at $227.96 in premarket trading. The stock has nearly doubled in 2023 on investor optimism
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