Mass Sell-Off... Tesla Loses 196 Trillion Won in Market Cap in Just 2 Weeks

Stock Price Drops 17% After Earnings Announcement
Investor Sentiment Worsens, Shaking the Electric Vehicle Industry

The market capitalization of U.S. electric vehicle manufacturer Tesla has evaporated by approximately 196 trillion won. This is analyzed as a result of investors pulling out due to a decline in electric vehicle demand amid reduced profits following vehicle price cuts and an unfavorable economic environment characterized by prolonged high interest rates. Wall Street predicts that these multiple adverse factors are unlikely to be resolved soon.

Tesla's stock, listed on the U.S. Nasdaq, closed at $200.84 on the 31st of last month (local time), up 1.76% from the previous session. The slight rise was driven by a rebound buying following the recent sharp decline in stock price. Since Tesla's Q3 earnings announcement on the 18th, the stock has fallen about 17.2% over roughly two weeks. During the same period, the S&P 500 index fell by only 2.8%, and the Nasdaq 100 index by 3.4%. As a result, Tesla's market capitalization disappeared by $145 billion (approximately 196.33 trillion won).

Elon Musk, CEO of Tesla.
Photo by AP Yonhap News

The aggressive price-cutting policy that began earlier this year led to reduced profits, causing the stock price to decline. Tesla's Q3 revenue this year was $23.35 billion, a 9% increase compared to the same period last year but below market expectations of $24.1 billion. Net income sharply dropped by 44% year-over-year to $1.853 billion. Adjusted earnings per share were 66 cents, also below the market expectation of 73 cents. Operating margin was 7.6%, down about 10 percentage points compared to the same period last year.

In particular, the delay in the new car launch schedule, which investors had anticipated, increased the extent of the stock price decline. Elon Musk, Tesla's CEO, said during the post-Q3 earnings conference call that mass production of the new 'Cybertruck' would be difficult and that "mass production will take more than a year and a half." The target for achieving the annual production goal of 250,000 units has been pushed back to 2025.

On Wall Street, growing distrust across the entire electric vehicle industry has led to forecasts that Tesla's stock will continue to perform poorly for the time being. Morgan Stanley pointed out in a report that day, "Investors have begun to think that the hundreds of billions of dollars invested in the electric vehicle industry may be 'value destructive' rather than 'value accretive.'"

Adam Jonas, a Morgan Stanley analyst, emphasized, "There is increasing market skepticism about investing in unproven electric vehicle strategies amid rising (production) costs, electric vehicle price cuts, prolonged high interest rate trends, and weakening market demand." Bloomberg noted that while the entire automotive industry is sluggish due to high interest rates and economic recession, the shockwaves on the still unestablished electric vehicle ecosystem will be even greater.

Japanese Panasonic, Tesla's battery supplier, announced in its Q3 earnings report the previous day that battery production decreased by 60% compared to the previous quarter due to reduced electric vehicle demand. Panasonic's stock closed at $8.74, down 6.52% from the previous session. Onsemi, a semiconductor producer for electric vehicles, reported Q3 earnings that exceeded expectations but saw its stock plunge 21.77% due to disappointment over its Q4 earnings guidance.

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