Tesla Stock Plunges Below $150, Wiping Out Year’s Gains

Tesla Stock

Tesla Inc. (NASDAQ:TSLA) shares nosedived below $150 per share, wiping out all gains accumulated over the past year, as the electric vehicle manufacturer grapples with plummeting sales and aggressive discounts aimed at stimulating demand.

The Elon Musk-led company witnessed its stock plummet by nearly 4% during intraday trading on Thursday, marking the third most severe week for Tesla investors in 2024, a year fraught with challenges. Shares in the Austin, Texas-based company have plunged by 12.4% this week alone and over 39% since the beginning of the year.

The downturn extends beyond stock performance, impacting Tesla’s workforce as well. Earlier this week, the company announced a global workforce reduction of 10%, translating to approximately 14,000 job cuts. Moreover, Tesla revealed its intentions to resurrect Musk’s $56 billion compensation package, which a Delaware judge previously dismissed in January due to concerns about Musk’s influence over the negotiation process.

Tesla’s stock reached its peak intraday high of $415.50 in November 2021, adjusting for a 3-for-1 stock split implemented in August 2022.

The company’s sales experienced a sharp decline last quarter amidst intensifying competition and sluggish growth in the global electric vehicle market. Despite implementing price cuts to entice buyers, Tesla reported delivering 386,810 vehicles from January through March, representing a nearly 9% drop compared to the same quarter last year.

Dan Ives, an analyst at Wedbush known for his bullish outlook on Tesla, labeled the first-quarter sales figures as an “unmitigated disaster.” He emphasized the pivotal juncture faced by Musk in navigating Tesla through these challenging times, cautioning of potential dark days ahead if decisive action is not taken swiftly to address concerns regarding margins and demand.

In response to heightened competition and softening demand, Tesla slashed prices by up to $20,000 on certain models, adversely affecting its profit margins and driving down the resale value of used electric vehicles. Similar challenges have compelled other automakers to reduce production and offer discounts to stimulate electric vehicle sales, with Ford notably cutting production of the F-150 Lightning electric pickup and reducing prices of the Mustang Mach E electric SUV by up to $8,100 for 2023 models.

While U.S. electric vehicle sales growth decelerated to 3.3% in the first quarter of the year, Tesla is set to report its full first-quarter earnings next week amidst ongoing challenges. Additionally, the company announced the departure of two senior executives this week: Andrew Baglino, Tesla’s senior vice president of powertrain and energy engineering, and Rohan Patel, senior global director of public policy and business development, each with significant tenures at Tesla.

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