Tesla’s Market Value Falls Below $500 billion- Bloomberg

Tesla‘s stock price continued to fall in 2024, pushing the electric car maker’s market value below $500 billion, as the round of employee layoffs announced by the company this week further deteriorated morale around the company, according to Bloomberg.

The stock price fell approximately 4% to below $154 during Tuesday trading in New York, losing about 38% during the current year. Tesla stock is the second-largest declining stock in the S&P 500 index in trading this year. The company has lost more than $290 billion in value since the end of the year. It should be noted that the company has not closed with a market value below $500 billion since late April of last year.

The company’s problems began in October when it warned that demand for electric vehicles was starting to slow, but the full extent of that weakness only became clear this month when Tesla reported first-quarter sales well below analysts’ expectations. These numbers reignited investor concerns about the company’s growth trajectory. Then came the news that Tesla intends to scrap its plans to make a cheaper electric car and focus on building so-called robotaxis instead. Monday’s announcement of widespread job cuts was the final blow.

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Demand Declines

“The extensive layoffs announced yesterday, which amounted to a reduction in staff production capacity, should leave no doubt that the decline in deliveries was the result of falling demand, not supply,” said Ryan Brinkman, an analyst at JP Morgan.

This lack of demand, which electric car makers are suffering from globally, is a more dangerous scenario for Tesla shares compared to the shares of other automakers. This is because the Elon Musk-led company is trading at a huge valuation premium, partly dependent on its ability to dominate the electric car industry in the future. Musk even said the company’s value will be “zero” unless it can solve the problem of self-driving cars.

Analysts and investors emphasize the importance of Tesla focusing on both self-driving cars for future prospects and affordable electric cars for immediate growth. They acknowledge that widespread adoption of autonomous vehicles could take decades.

“While Tesla is being proactive about cutting costs this time around given the disastrous deliveries in the first quarter and the overall pressure on the business, this is a major cost-cutting initiative for a company caught between two waves of growth, “said Wedbush analyst Dan Ives.

Tesla is expected to announce its first-quarter business results on April 23, and risks are rising quickly for the company. Investors will be looking for an explanation as to why there was a strategic shift at a time when growth is in doubt.

“We need to know the rationale for cost cuts, the strategy going forward, the product roadmap, and the overall vision from Musk, otherwise many investors may exit,” Ives added.

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