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Reflection on Tesla’s Diminished Deliveries and a Possible Downward Spiral

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Tesla, Inc. plummeted by nearly 6% in pre-market trading following an underwhelming delivery report for the first quarter. Contrary to market expectations, the electric vehicle (EV) pioneer managed to produce 433,000 vehicles but disappointingly dispatched only 387,000. This letdown is fueling concerns about Tesla’s lofty valuation.

The company’s delivery performance missed the FactSet consensus of 457,000 as well as its own deliveries from recent quarters. With the Q1 figures falling below the mark set in 2023, Tesla shareholders are feeling the pinch, especially amid its declining market share in China. In March 2024, Tesla’s Chinese sales increased by a minimal 0.2% year-over-year, failing to keep pace with the overall 33% surge in EV sales across the country.

Interestingly, the EV industry at large is grappling with challenges beyond Tesla. A surplus in supply outstripping demand is afflicting the sector. However, Tesla’s commanding size and profitability within a turbulent landscape liken it to the sturdiest house in an unstable neighborhood.

Despite the stiff competition, both in China and the US, Tesla holds its ground admirably. While some consumers are swaying back to hybrid vehicles, Toyota Motors’ soaring stock indicates the shifting preferences. Additionally, Tesla faces pressure to keep up with emerging automotive trends, although the fruition of its rivals’ promises remains uncertain.

Navigating the Turbulence of the EV Market

Tesla’s role in the electric vehicle ecosystem transcends mere car manufacturing; it stands as a pivotal player in EV infrastructure and charging solutions. Despite the recent stock slump nudging TSLA towards its 52-week low, mounting apprehensions over the impending earnings release on April 17 and the prevailing market downturn could prolong the correction.

Moreover, a spike of over 6% in short interest within the last month suggests a potential descent for TSLA, possibly revisiting its five-year low. A plunge to around $112 per share would signify a substantial 32% markdown from its current valuation and an imposing 80% retreat from its peak over the past year.

This piece originally appeared on MarketBeat as β€œTesla Stock Drops on Weak Delivery Numbers and it May Fall More.”

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