Tesla Stock On Track For Worst Year Ever As Elon Musk’s EV Giant Faces Big 4

Tesla (TSLA) has been a monster stock over much of its history, especially from its stratospheric run from mid-2019 to late 2021. But in 2022, Tesla stock has been a big loser, on track to drop nearly 52% in November . 22.




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That would easily surpass 2016’s 11% drop, the only other annual decline since Tesla stock went public in 2010. The selloff has been tougher, and the EV giant has lost nearly half its value in the past two months. On Monday, TSLA stock slid 6.8% to a fresh two-year low, the worst performer for the S&P 500 session.

Here are some of the big ones facing TSLA stock, from Elon Musk’s “Twitter circus” to Tesla demand concerns.

Annual Performance of Tesla Stock

Year Change in Tesla stock
2010 56.6%
2011 6.7%
2012 18.9%
2013 343.8%
2014 47.9%
2015 7.9%
2016 -11.0%
2017 45.7%
2018 6.9%
2019 25.7%
2020 743.7%
2021 49.7%
2022 YTD -51.8%

China’s Covid concerns

Beijing is essentially on lockdown amid the city’s first Covid deaths in months. Further restrictions were imposed in China on Tuesday as cases of the coronavirus surge towards official all-time highs.

It will be extremely difficult to maintain coverage of the more infectious omicron variants, since hundreds of millions of Chinese have not yet contracted Covid.

And that comes after China eased restrictions slightly, raising hopes that the country would withdraw its zero-Covid policy.

Renewed restrictions will further strain China’s ailing economy, reduce demand for EVs, including Tesla, and raise renewed risks of production disruptions.


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Demand Tesla

China’s Covid woes weigh on Tesla demand, partly due to a big increase in Shanghai production. Tesla has already cut prices in China, but there are reports in the local media of further cuts before the end of the year, but waiting times are essentially zero. Tesla may be betting on a big quarter for European sales, but that could drag down arrears before 2023.

On January 1, EV subsidies end in China and Norway, with Germany cutting subsidies significantly. Sweden has just ended its EV subsidies and the UK is ending its program. All of that could hurt Tesla EV demand and pricing in Europe and China.

That comes as China’s EV competition heats up, with more and more models from the likes BYD (BYDDF), No (NIO), Li Auto (LI) and more adopting Tesla’s aging Model 3 and Model Y. The European EV market is also becoming increasingly crowded.

On the flip side, Tesla will be eligible for new US tax credits of up to $7,500 per vehicle. Tesla still faces much less competition in its home market than in Europe and China.

The Tesla Cybertruck is expected to begin production next year, with Musk expecting an “early” release in mid-2023. But if the oft-delayed Cybertruck stays on schedule, volume deliveries may not begin until until the end of the year or 2024.


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Elon Musk’s Twitter Kingdom

Tesla CEO Elon Musk has owned Twitter for less than four weeks, but it already feels like an age. The team has been slashed in half, and many other employees are leaving. Over the weekend, Musk reinstated Donald Trump’s Twitter account, but then followed a vulgar meme directed at the former president. Advertising revenue is falling.

All this has raised concerns that Musk is damaging his image. Even longtime TSLA bulls fear that could destroy the Tesla brand.

Musk may also sell even more Tesla stock to pay Twitter’s bills. Musk has sold Tesla stock several times this year, citing Twitter as the reason for the two most recent batches.

TSLA Stock Follows EV Rivals, Aggressive Growth

Tesla stock is not doing well. But he is not alone. Aggressive stocks had a terrible 2022. Tesla’s EV rivals in particular have struggled, including Nio stock Li Auto, Riavach (RIVN) and BYD. So, by that measure, TSLA stock doesn’t look too bad during 2022. However, BYD is flat in November and Nio and Li Auto are up this month, with a quarter of their value Tesla stock lost.

More broadly, a bear market has dominated for most of the year. Although the major indexes have recovered from the October lows, they are still down significantly for the year, especially the Nasdaq.

Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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