Tesla stock fell to a new 52-week low on Thursday, just days before Elon Musk’s electric vehicle company is set to report full earnings for the first quarter of 2024.
The company’s latest hit came early on Thursday morning when Deutsche Bank downgraded Tesla stock from a buy rating to a hold rating and lowered its price target from $189 per share to $123 per share. The firm had based its buy rating on hopes Tesla would unleash the “Model 2″— a $25,000 electric car — next year, which has been canceled as it focuses on a self-driving robotaxi.
Now, Deutsche analyst Emmanuel Rosner wrote, Tesla’s future is tied to “cracking the code on full driverless autonomy,” which represents a “significant technological, regulatory and operational challenge.”
“We view Tesla’s shift as thesis-changing, and worry the stock will need to undergo a potentially painful transition in ownership base,” Rosner wrote Thursday, noting that electric vehicle investors may start “throwing in the towel” and be replaced “by AI/tech investors with considerably longer time horizons.”
Tesla stock slipped more than 2% and stood at about $151.70 per share in Thursday morning trading. Earlier in the day, the stock dipped as low as $148.70 per share.
The stock has fallen about 39% so far in 2024, making Tesla one of the worst performers in the S&P 500, only outmatched by insurance company Globe Life — which is being targeted by short-sellers and has dropped 45%. Tesla’s market capitalization has dropped to about $475 billion. Except for a brief decline earlier this week, Tesla last fell below $500 billion at its previous 52-week low in April 2023.
Tesla CEO Elon Musk sent the company’s roughly 140,000 employees a late Sunday night memo informing them of mass layoffs. “More than 10%” of workers — or at least 14,000 people — have lost their jobs, according to a regulatory filing. At least two top executives have also resigned from Tesla this week.
Musk on Wednesday apologized to employees for offering “incorrectly low” severance packages to some workers. Tesla offered laid-off workers two months of severance pay and health insurance for workers who were covered by the company’s plans, Business Insider reports.
The layoffs came after an abysmal first fiscal quarter that saw the electric vehicle maker fall far short of Wall Street’s sales expectations. Musk cited a “duplication of roles and job functions in certain areas” that sprung up as the EV maker expanded its operations across the U.S., Europe, and Asia.
Now, investors are anxiously waiting for Musk to reassure them that Tesla will be fine in the long term and outline a new growth strategy.
“In our view the clock has struck midnight for Musk to now lay out the growth strategy, give realistic delivery and margin goal posts, discuss why significant layoffs now, and most importantly give a clear outlook to the Street around Model 2,” Wedbush analyst and Tesla bull Dan Ives wrote Wednesday.