Tesla, cuts are not enough: shares fall again. Capital less than 500 billion

Listen to the audio version of the article

Below $500 billion, it hasn’t happened since the end of April 2023. Tesla shares extended their steep decline into 2024, pushing the electric car maker’s market value below $500 billion, while the series of job cuts this week has worsened . feelings for the company.

The stock fell as much as -4%, dropping below $154 at the same time, bringing its decline for the year to nearly 38%. Tesla is below the S&P 500 index in 2024, even the second largest decliner.

A turning point was seen in October, when demand for electric vehicles began to decline, but the full extent of this weakness was only seen this month, when Tesla reported first-quarter sales significantly below analysts’ expectations. These numbers have reignited investor concerns about Tesla’s growth trajectory. Then came the news that the company plans to abandon plans to produce cheap EVs and instead focus on building the so-called robotaxi. Monday’s announcement of massive job cuts, 10% of the workforce or nearly 14,000 workers, was the latest blow.

“The massive layoffs announced yesterday left no doubt that the decline in shipments was due to lower demand and not supply,” said Ryan Brinkman, an analyst at JPMorgan Chase.

The decline in demand, which is causing many problems for electric car manufacturers around the world, is the worst situation for Tesla. That’s because the Elon Musk-led company has a huge valuation premium, based in part on its ability to dominate the electric car industry of the future. Musk also said that the company “will be worth nothing” if it fails to solve the problem of self-driving cars. Last summer Musk announced this step into the future thanks to an investment of one billion in the Dojo supercomputer.