Tesla Drops 13% on First Trading Day... Apple Also Falls Below $2 Trillion Market Cap

[Asia Economy New York=Special Correspondent Joselgina] On the first trading day of the new year in the U.S. New York stock market on the 3rd (local time), the representative tech stocks Tesla and Apple continued to plunge. Tesla's stock price fell by double digits as concerns about demand surfaced due to disappointing electric vehicle delivery results, and Apple also saw its market capitalization fall below the $2 trillion mark during the session.

[Image source=Reuters Yonhap News]

As of 12:21 a.m. Eastern Time in the New York stock market on that day, Tesla's stock price was trading at $106.03, down 13.92% from the previous close. Tesla, which plunged about 65% throughout last year, broke its 52-week low from the very first trading day of the new year, leading the overall decline in the New York stock market. Apple was also trading at around $124.76, down 3.98% from the previous close. Its market capitalization also fell below $2 trillion.

The sharp decline in Tesla and Apple's stock prices on the first trading day of the new year is analyzed to be due to concerns over demand slowdown surrounding their main products amid interest rate hikes and fears of economic recession slowdown.

In particular, Tesla's Q4 electric vehicle delivery results for last year, released the day before, showed 405,278 units, falling short of Wall Street expectations. Tesla delivered about 1.31 million electric vehicles on an annual basis. Although this represents a 40% increase compared to the previous year, it fell short of Tesla's target of 50%. To stimulate demand in Q4 last year, Tesla implemented price cuts and promotional discounts in the U.S., China, and other regions, but these efforts also failed to produce significant effects.

Tony Sakonagi Jr., a junior analyst at Bernstein Research, pointed out right after Tesla's electric vehicle delivery results were released the day before that "Tesla is facing a serious demand problem." He warned that Tesla might have to lower electric vehicle prices by $1,800 to $4,500 compared to Q3 2022 and said, "The demand problem will persist until Tesla introduces a large number of low-priced vehicles, which are difficult to predict in the short term."

Apple also showed a downward trend from the first trading day as concerns about weakening demand surfaced. Earlier, Nikkei Asia reported that Apple had notified some suppliers to reduce production of parts for MacBooks, Apple Watches, and other products in Q1 due to worsening demand. Economic media CNBC reported, "This is a stark contrast to a year ago when Apple became the first U.S. company to surpass a $3 trillion market capitalization."

Accordingly, the New York stock market, which started the first trading day of the new year with gains, is recording a decline across the board. The Nasdaq index, centered on tech stocks, is down more than 1.2% from the previous close.

Greg Basuk, CEO of AXS Investments located in New York, predicted, "The recession environment in 2023 could further worsen the performance of tech stocks in the new year." On the following day, the 4th, investors will focus on the release of the December Federal Open Market Committee (FOMC) minutes and the November Job Openings and Labor Turnover Survey (JOLTs).

However, Wall Street also analyzes this decline as a buying opportunity. Morgan Stanley said on the day, calling it a "buying opportunity," and evaluated, "All automakers face obstacles to overcome amid the macroeconomic environment and intensifying competition. In this situation, Tesla has the potential to leverage economies of scale to gain an advantage in the electric vehicle competition."

This content was produced with the assistance of AI translation services.