Owning Tesla shares this year hasn’t been smooth sailing for investors.
The electric car maker’s stock has fallen nearly 70% year-to-date, and is on pace to be among the five worst-performing S&P 500 stocks. By comparison, the benchmark index is down about 20%.
Tesla continues to grow its profits, but signs of softening demand and increasing competition are making investors increasingly worried. And then there’s his Twitter acquisition by CEO Elon Musk.
Several of Musk’s actions since acquiring the social media company, including scrapping a content moderation structure created to address hate speech and other issues on the platform, have unsettled advertisers on Twitter. and turned off some users.
This has raised concerns on Wall Street that Twitter is getting too much attention from billionaires and could be angering Tesla’s loyal customers.
Wedbush analyst Dan Ives said in a research note this week that Musk’s acquisition of Twitter caused a political uproar, undermining the Musk and Tesla brands and leading to a “complete stock collapse.”
Musk has said he plans to stay on as Twitter’s CEO until he finds someone willing to take his place.
Despite Musk’s focus on Twitter, Tesla’s performance has been solid this year. Through his first three quarters of 2022, the Austin, Texas company more than doubled his profit and revenue year-over-year.
Still, electric vehicle models from other automakers are beginning to undermine Tesla’s dominance in the U.S. EV market. From 2018 to 2020, Tesla held about 80% of his EV market. That share continues to decline, with him dropping to 71% in 2021, according to data from S&P Global Mobility.
In a rare move this month, Tesla began offering discounts on the company’s two best-selling models through the end of the year. This indicates a slowdown in demand for the company’s electric vehicles.
Ives said Tesla will likely underperform Wall Street forecasts when it reports its fourth-quarter results, citing higher inventory levels, recent price cuts and an overall slowdown in production in China. I am predicting. He also expects a “more gradual trajectory in 2023.”
“The reality is that after the Cinderella story demand environment of 2018 and beyond, Tesla faces some serious macro- and company-specific EV competitive headwinds heading into 2023, with both the U.S. and China It’s starting to emerge,” writes Ives.
Still, Ives is optimistic that Tesla’s long-term prospects remain solid as the global market for electric vehicles grows, and Musk is again focused on Tesla.
“But Musk’s further strategic missteps will come under careful scrutiny and weigh further on the stock,” he wrote.