Tesla share price extended fall for 2024, pushing its market valuation briefly below $500 billion amid a round of job cuts this week underscoring that the company’s growth has slowed. Tesla stock price ended 2.7% lower at $157.11 on Tuesday in New York, after hitting a low of $153.75 during the session. Tesla shares have fallen 37% this year so far, becoming the second-biggest decliner on the S&P 500 Index in 2024, erasing about $290 billion in shareholder wealth.
Tesla shares have not closed with a market value under $500 billion since late April last year and stayed narrowly above the mark as of Tuesday’s close, Bloomberg News reported. Earlier this month, the electric vehicle (EV) manufacturer reported first-quarter sales significantly below analysts’ expectations, raising concerns about Tesla’s growth trajectory, which were exacerbated by news that the company intends to scrap plans to make a cheaper EV and focus on building a so-called robotaxi instead, the Bloomberg report added.
That pivot — Musk said the company will unveil its robotaxi in August — comes as Tesla’s profit outlook is darkening quickly, as it has repeatedly resorted to lowering the price of its vehicles to attract buyers, the report said. Tesla had warned about slowing demand for EVs in October last year.
The fading interest from consumers, which is plaguing EV makers globally, is a more dire scenario for Tesla shares than for other carmakers. That’s because the Elon Musk-led company commands a hefty valuation premium, partly based on its potential to dominate the EV industry of the future. However, Musk himself has said the company will be “worth basically zero” unless it can solve the problem of self-driving cars.
Analysts and investors emphasize that while the development of a fully autonomous vehicle is pivotal for Tesla’s prospects, the creation of an affordable EV holds significant importance in fostering growth in the interim. This is particularly pertinent considering the widespread consensus among experts that the mass adoption of self-driving cars may require several decades to materialize.
“The near-term bull case for Tesla is that investors are awaiting the launch of a lower-cost platform that will dramatically reinvigorate growth,” said David Wagner, a portfolio manager at Aptus Capital Advisors. “But the market is realizing that this may be unlikely, as the $25,000 car already exists today – China’s BYD makes it.”