Tesla (TSLA) has been a monster stock for most of its history, especially from mid-2019 to late 2021. But in 2022, Tesla stock has been a big loser, on track to drop nearly 52% as of November 22nd.
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That would easily surpass 2016’s 11% drop, the only other annual decline since Tesla’s stock went public in 2010. The sell-off has intensified, with the electric vehicle giant losing nearly half its value in just the past two months. On Monday, TSLA stock fell 6.8% to its lowest level in two years, the worst performance for the S&P 500 during the session.
Here are some of the major headwinds facing TSLA stock, from Elon Musk’s “Twitter Circus” to Tesla’s demand concerns.
Tesla Stock Annual Performance
| year | Tesla stock change |
|---|---|
| 2010 | 56.6% |
| 2011 | 6.7% |
| 2012 | 18.9% |
| 2013 | 343.8% |
| 2014 | 47.9% |
| 2015 | 7.9% |
| 2016 | -11.0% |
| 2017 | 45.7% |
| 2018 | 6.9% |
| 2019 | 25.7% |
| 2020 | 743.7% |
| 2021 | 49.7% |
| 2022 since the beginning of the year | -51.8% |
China covid fears
Beijing is essentially locked down amid the city’s first Covid deaths in months. More restrictions were imposed in China on Tuesday as coronavirus cases rose towards an all-time official high.
Keeping a lid on the most contagious omicron variants will be very difficult, given that hundreds of millions of Chinese have not contracted Covid yet.
It comes after China eased restrictions slightly, raising hopes that the country will reverse its policy of not spreading the coronavirus.
The renewed restrictions will further cool down China’s ailing economy, reducing demand for electric vehicles, including Tesla’s, and raising renewed risks of production outages.
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Tesla asked
China’s Covid woes are feeding into Tesla’s demand concerns, in part due to a big production ramp-up in Shanghai. Tesla has already cut prices in China, but there are local media reports of more cuts before the end of the year, but wait times are basically at zero. Tesla could be betting on a big quarter of European sales, but that could reduce the backlog in 2023.
On January 1st, subsidies for electric cars ended in China and Norway, with Germany significantly cutting subsidies. Sweden just ended subsidies for electric vehicles while the UK ends its programme. All of which could hurt Tesla EV demand and prices in Europe and China.
It comes as competition in China for electric vehicles intensifies, with more and more models from the likes of BYD (BYDDF), New (nio), Lee Otto (L.I) and more dealing with the old Tesla Model 3 and Y. The electric car market in Europe is also getting crowded.
On the flip side, Tesla will be eligible for new US tax credits of up to $7,500 per vehicle. Tesla still faces much less competition in its home market than in Europe and China.
Production of the Tesla Cybertruck is expected to begin next year, and Musk expects “early” production in mid-2023. But if the oft-lag Cybertruck stays on schedule, volume deliveries may not begin until the end of the year or 2024.
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The Elon Musk era on Twitter
Tesla CEO Elon Musk has had Twitter for less than four weeks, but it already looks like it’s been around for ages. He cut the staff by half, with many other employees leaving. Over the weekend, Musk reinstated Donald Trump’s Twitter account, but then followed it up with a vulgar meme directed at the former president. Advertising revenue goes down.
All of which raised concerns that Musk was harming his image. Even the longtime bulls of TSLA feared it would tarnish the Tesla brand.
Musk may also sell more Tesla stock to pay his Twitter bills. Musk has sold Tesla shares several times this year, citing Twitter as the reason for the two latest pushes.
TSLA stock is following its EV rivals, with aggressive growth
Tesla shares are not doing well. But she is not alone. Aggressive stocks have had a terrible 2022. Tesla’s EV competitors in particular have struggled, including shares of Nio, Li Auto, and Rivian (countryside) and BYD. So by this metric, TSLA stock doesn’t look particularly bad over the course of 2022. However, BYD stock held steady in November while Nio and Li Auto rose this month, while Tesla stock lost a quarter of its value.
More broadly, most of the year has been dominated by a bear market. And while the major indices have rebounded from their October lows, they are still down significantly for the year, especially the Nasdaq.
Please follow Ed Carson on Twitter at @employee For stock market updates and more.
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