Tesla collapse in 2022 hits 69 percent in deepest selloff since April

The slide in Tesla shares accelerated overnight in the U.S., marking its longest losing streak since 2018, when a report of a plan to temporarily halt production at the automaker’s factory in China reignited fears over demand risks.

Shares in the Elon Musk-led company closed down 11 percent at $109.10, for the seventh straight decline and steepest single-day drop since April. The electric vehicle maker’s market valuation has shrunk to about $345 billion ($513 billion), below those of Walmart, JPMorgan and Nvidia.

This latest sell-off also cost Tesla its position among the top 10 highest-rated companies in the S&P 500 Index, a distinction it has held since joining the benchmark in December 2020.

Tesla's market cap has fallen to $345 billion.

Tesla’s market cap has fallen to $345 billion.Credit:AP

The news of reduced production in Shanghai follows last week’s report that Tesla offered US consumers a $7,500 rebate for delivery of its two highest-volume models before the end of the year, adding to concerns that demand is slowing. For Tesla, whose valuation is biased toward its future growth prospects, those concerns reflect significant risk.

“Most of the stock’s weakness this year can be attributed to indicators showing slowing global demand,” said Craig Irwin, an analyst at Roth Capital Partners. Tesla’s estimated sales growth “is still amazing, but not amazing at the $385 billion market valuation,” he said, referring to the figure late last week.

Analysts, on average, expect sales to grow 54 percent in 2022 and 37 percent in 2023, data compiled by Bloomberg shows.

Hopes that Tesla will be the leading EV company in an electric-car-dominated future led to a spectacular eight-fold rally in shares in 2020, securing its spot in the S&P 500 and at times making it the fifth most valuable stock on the meter.

Breakneck relaxation

But this year the settlement came just as quickly. It has lost 69 percent of its value amid Musk’s Twitter acquisition and its attendant distractions, investor jitters about growth stocks, and more recently worries that high inflation and rising interest rates will dampen consumer enthusiasm for electric vehicles.

https://www.smh.com.au/business/companies/tesla-s-2022-collapse-hits-69-per-cent-in-deepest-selloff-since-april-20221228-p5c92d.html?ref=rss&utm_medium=rss&utm_source=rss_business Tesla collapse in 2022 hits 69 percent in deepest selloff since April

Brian Lowry

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