Tesla is the S&P 500's worst stock this year.

A comprehensive review of Tesla's recent turmoil on the stock market and factors contributing to the company's struggles against investor's expectations.

First Quarter Losses

Renowned electric automobile manufacturer, Tesla, recently witnessed a steep plummet in its stock performance, becoming the worst performing stock in the S&P 500. This decline is largely attributed to the company's less than stellar first quarter earnings for 2021, which tremendously missed investors' expectations. The poor revenue outcome led to a significant blow on the company's stock performance, prompting a lot of concern among investors. While Wall Street analysts predicted an adjusted earnings per share of 75 cents, Tesla only posted 39 cents, representing a sharp decline.

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Production and Delivery Challenges

Tesla is the S&P 500

Tesla has also grappled with various production and supply chain challenges which have significantly affected its financial standing. These issues have been exacerbated by the global pandemic and worldwide chip shortage which impeded the production of electric vehicles and subsequently, their delivery to eager customers. The limited number of vehicles produced and poor delivery rates further caused the company's stock value to drop drastically. The company also faced quality control issues, resulting in many cars being returned or needing servicing shortly after purchase.

Bitcoin Investment Backlash

The backlash from Tesla's bitcoin investment did not help the situation either. The company unexpectedly invested in Bitcoin earlier in the year, a move that attracted significant backlash and skepticism. This decision not only led to a decrease in stock value but also raised questions about the company's environmental commitment. Bitcoin mining is known to have serious environmental implications, therefore this move seemed to contradict Tesla's mission to foster sustainable energy.

The CEO Factor

Tesla CEO, Elon Musk's unpredictable acts also played a role in Tesla's stock decline. Musk's unscripted comments, tweets and decisions have often led to drastic changes in Tesla's stock value. Many investors believed that Musk’s unpredictability affected the company's performance and has questioned his ability to lead. Relations with stakeholders have also undergone significant strain due to Musk's actions and public statements.

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Musk's Tweets

Within the crypto market, Musk has single handedly driven changes due to his tweets. Whether it is promoting a new cryptocurrency or pulling away from one, his tweets have had a significant influence on the market. Also, his announcement about Tesla’s decision to no longer accept bitcoin as payment for vehicles due to environmental concerns caused waves in the investment world. The ripple effect was immediately felt, causing the stock value to tumble.

Regulatory Concerns

Regulatory concerns in target markets have further contributed to the erosion of Tesla's stock value. Tesla is facing mounting pressure from regulatory bodies not only in the US but also abroad. Concerns about the safety of Tesla cars and scrutiny over Tesla’s autopilot system have been raised time and again.

China Boycott

Moreover, the Tesla boycott in China, which is a significant market for the company, posed further problems. Chinese government officials and military personnel were instructed not to use Tesla cars, claiming that the vehicle's cameras could potentially collect sensitive data.

The SolarCity Controversy

The controversy sparked by Tesla's SolarCity acquisition also played a role in shaping investor confidence in the stock. Musk has been embroiled in a legal dispute regarding whether the decision to buy SolarCity was in the best interest of Tesla shareholders. This controversy has significantly spooked investors and hurt the stock price.

A Competitive Market

Intense competition in the electric vehicle market has also provided challenges for Tesla. As more automotive giants like Ford and General Motors dive into the EV market, Tesla's dominance is being challenged. Market share is being fought over more intensely and Tesla’s unique identity is being threatened by these new entrants.

Profitability Questions

Questions about Tesla’s profitability continue to circulate on Wall Street. Although Tesla has indeed posted profits in recent times, some skeptical analysts attribute a good chunk of these profits to the sale of regulatory credits as opposed to vehicle sales.

The Climate Change Debate

The debate surrounding climate change is another factor affecting Tesla’s stock. While Tesla is at the forefront of promoting sustainable energy, questions about resource usage, carbon footprint and the overall environmental impact of EV manufacturing persist.

Consumer Trust Concerns

Public trust in Tesla has generally reduced due to the series of quality control issues it has faced. These trust issues have been fueled by incidents of Tesla cars involved in accidents while on autopilot, leading consumers to question the dependability of Tesla technologies.

Media Influence

The influence of the media in shaping public perception of Tesla must also be considered. The media has drastically shaped perceptions about Tesla's operations and its future.

Market Volatility

The overall volatility in the stock market made worse by the pandemic has also played a role in Tesla's stock performance. With a shaky economic outlook and low consumer spending, numbers were bound to be affected.

The Role of Speculative Trading

Finally, speculative trading has equally impacted Tesla's stock. When Tesla's stock was sky high, many investors bought into the hype without a clear understanding of the company's financials. When unmet expectations led to sell offs, the stock value plummeted.

Corrective Measures

Despite these troubles, Tesla has shown resilience and has implemented corrective measures such as price cuts and product improvements.

Positives on the Horizon

But it isn’t all negative for Tesla. The company is committed to innovation and scaling operations. With an expanding lineup of electric vehicles and ongoing research into self-driving cars, Tesla still holds great potential.

Resilience of Tesla

Furthermore, Tesla has shown the resilience to bounce back from turbulent periods in the past. Despite the current struggles, the company has historically managed to rebound from similar low points.

Conclusion

With constant evolutions in the auto industry and competitors joining the EV market, only time will tell how Tesla fares in the ventures they undertake. Despite their struggles, Tesla continues to influence the auto industry and remains a reference in the field of clean-energy transportation. The future is bright, albeit uncertain.

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