Tesla shed over US$50bn in value in the US overnight, as investors punished the electric vehicle for a mixed set of first-quarter results
As one magazine pointed out, the decline in Tesla’s market cap was more than the entire value of Ford, its nearest US rival in the EV market.
Elon Musk will almost certainly lose his top spot in the rich list following the tumble, which he had briefly regained after a rally that had seen Tesla shares climb 57% since January.
A big chunk of that was wiped off yesterday as investors took fright at the impact of recent price cuts on margins and the possibility of more to come in an EV price war as rivals match Tesla’s reductions.
Tesla reported that the lower average prices of its cars contributed to a 24% decline in first-quarter profit, while its operating margin fell to 11.4% from 19.2% a year ago.
Daniel Ives at Wedbush and a big fan of the carmaker said: “We believe Tesla now walks a tightrope between margin pressure vs. driving stronger Model Y/3 demand globally”.
Wedbush believes that the 1.8mln delivery guidance already guided by the company remains hittable/beatable, but cut its price target to US$215 US$225 been so.
Shares closed yesterday at US$163, down US$17.60 on the day.