"Like a Collapsed Train" Tesla's Stock Plummets Over 12% Amid Growth Concerns (Comprehensive)

"Like a collapsed train." Amid concerns over a slowdown in electric vehicle demand, Wall Street warnings are pouring in around Tesla, which announced results below expectations. Amid investor disappointment, Tesla's stock price plummeted by double digits in a single day.

On the 25th (local time) in the New York stock market, Tesla's stock closed at $182.63 per share, down 12.13% from the previous close. This is the worst drop since a 21% plunge in September 2020.

This decline is analyzed to be due to the quarterly earnings and future earnings guidance released after the market closed the previous day falling short of market expectations, as well as the company reaffirming a pessimistic outlook that "the sales growth rate in 2024 could be significantly lower." Tesla's stock price has already fallen more than 26% this year alone.

[Image source=AP Yonhap News]

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In particular, on Wall Street, strong concerns are being expressed not only about the poor performance and halved operating profit margin but also about CEO Elon Musk not specifying growth targets such as annual delivery volume. It is considered unusual that Tesla, which had presented an average annual growth rate of 50% for several years until last year, did not disclose an annual delivery target.

Dan Ives, a Wedbush analyst and a prominent Tesla bull, likened Tesla's earnings announcement the previous day to a "train wreck." He had expected CEO Musk and the management team to provide responsible answers regarding the recent outlook for electric vehicle demand slowdown, price cuts, and the resulting net profit structure, but said, "We were wrong," and described it as "like a collapsed train."

Additionally, analyst Ives predicted that Tesla's margins would decline further as price cuts continue. Accordingly, Tesla's 12-month target price was lowered from $350 to $315. This contrasts with the optimistic outlook earlier this month, when despite overall concerns about a slowdown in electric vehicle demand, Tesla's demand was seen as solid.

Barclays also lowered Tesla's target price by about 10% to $225 per share. In an investment memo released that day, the company said, "It is not as bad as feared," but expressed concern that "downside risks are increasing." UBS also lowered its target price to $225 and recommended a wait-and-see stance, stating, "There is little reason for investors to buy more Tesla shares." The Royal Bank of Canada (RBC) lowered its target price from $300 to $297 per share. Goldman Sachs, concerned about potential short-term headwinds, set a target price of $220 per share.

The current median 12-month target price suggested by Wall Street is understood to be $225 per share. Major foreign media reported that at least nine institutions have downgraded their investment opinions on Tesla. The fact that Tesla's current stock price is about 60 times the 12-month earnings estimate is also cited as a factor hindering further upside potential. TD Cowen diagnosed, "Tesla's news has changed from 'bad' to 'worse.'"

However, buy opinions still remain. Morgan Stanley maintained a "buy" rating with a target price of $345. Ben Barringer, an analyst at asset management firm Quilter Cheviot, predicted, "The macro environment, including future interest rate cuts, could increasingly work in Tesla's favor."

Meanwhile, despite Tesla's sharp decline, the New York stock market closed higher across the board, bolstered by a strengthened soft landing outlook supported by strong economic growth. The S&P 500 index, centered on large-cap stocks, extended its rally for six consecutive trading days, hitting another all-time high. The Dow Jones Industrial Average rose 0.64%, and the Nasdaq index increased 0.18%. The U.S. fourth-quarter growth rate released that morning exceeded market expectations, supported by solid consumption. According to the Department of Commerce, the fourth-quarter gross domestic product (GDP) growth rate was recorded at an annualized 3.3%.

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