The beginning of the year has not been favorable for electric-vehicle enthusiasts, as various factors have contributed to the decline in Tesla’s share price. Firstly, the extreme cold weather in Chicago caused some electric vehicle drivers to be stranded. Additionally, Tesla has reduced prices in both China and Europe, which may have affected investor confidence. Furthermore, Ford Motor has decided to scale back production of its F-150 Lightning electric truck in the United States, further impacting the overall sentiment towards electric vehicle stocks.
Unfortunately, the decline in Tesla’s stock price is not limited to January alone. As of midday Friday, Tesla’s stock has fallen by 1.6% to $208.51, resulting in a total decline of 16% for the month. In comparison, the S&P 500 and Nasdaq Composite have experienced modest gains of 0.5% and 0.6% respectively.
This downward trend in Tesla’s stock price is concerning, as it puts the company on track to set an unfavorable record. If the shares continue to close lower on Friday, it will mark the tenth trading day of losses out of the first twelve, making it the worst start to a year in Tesla’s history. This is reminiscent of the declines experienced in 2015 and 2016, where shares fell in nine out of the first twelve trading days.
Overall, the current performance of Tesla’s stock reflects a challenging period for the company and the electric vehicle industry as a whole. Investors will be closely monitoring future developments to assess the potential for a turnaround in Tesla’s share price.
However, Tesla’s recent performance stands out positively when compared to its competitors. On Friday, Chinese EV makers NIO, XPeng, and Li Auto experienced declines of 4.5%, 4.1%, and 3% in their respective shares. Throughout January, NIO shares have dropped by 34%, XPeng by 35%, and Li shares by 25%.
The decline in shares on Friday cannot be attributed to any new developments. Rather, it is a continuation of the ongoing Chinese EV price wars, which have significantly impacted investor sentiment.
Rivian Automotive (RIVN) shares experienced a decline of 1.2% during Friday’s trading session, contributing to a year-to-date decrease of 34%. Similarly, Fisker shares faced a 2.2% drop, despite receiving an upgrade to Hold from Sell on Thursday evening. Overall, Fisker’s stock has witnessed a significant decline of approximately 55% since the beginning of the year.
There are various factors contributing to the recent weakness in the market, including downgrades, production cuts from Ford, disappointing delivery numbers from VinFast Auto, and controversial tweets from Tesla CEO Elon Musk. These events have led to investors selling their stocks.
Determining when or why the selling will stop is a challenging task. However, the upcoming earnings report could potentially provide some insight. Tesla is scheduled to release its fourth-quarter earnings on Wednesday, Jan. 24 after the market closes.Analysts anticipate a projected earnings per share of 73 cents. In addition to beating earnings expectations, any positive comments from Musk regarding stable pricing or improved profit margins would greatly boost investor sentiment.
Technical analysis of stock charts is another aspect to consider. Market technicians analyze stock charts to gain an understanding of the potential movement of a stock in the short or medium term. Currently, Tesla stock is considered oversold, which means it has experienced a significant and rapid decline. Oversold stocks often see a rebound as all the negative news is already priced into the shares. This could provide some comfort to Tesla bulls. Furthermore, Katie Stockton, the founder of Fairlead Strategies, identifies a potential support level for Tesla stock at $208, which is around the price at which shares were trading on Friday.