March was another tough month for Tesla (NASDAQ: TSLA) as the leading electric vehicle maker continued to face challenges related to production and demand.
There weren’t any major reasons for the sell-off, but analyst sentiment on the stock seemed to sour heading into its first-quarter earnings report later this month, and the company was forced to temporarily shut down its German factory after an arson attack on the electrical grid.
According to data from S&P Global Market Intelligence, the stock fell 13% last month. As you can see from the chart below, most of its losses came in the first half of the month.
The biggest event seemed to be the power outage at its Berlin Gigafactory as it lost power for a week starting on March 5. That was one of the factors pushing the stock lower in the beginning of March, and negative sentiment from Wall Street also seemed to weigh on the stock as well.
Citigroup, for example, said that first-quarter results seem likely to come in below consensus as analyst Itay Michaeli said it’s “tough to get bullish with consensus still high,” but said the Model 3 refresh would help.
Wells Fargo, meanwhile, downgraded the stock to an underweight rating due to price, demand, and valuation concerns and gave it a price target of just $125. The bank also noted that volume and earnings were likely to disappoint this year, and the valuation sets the stock up for a fall.
In the middle of the month, Tesla stock got a modest rebound after the company said it would raise prices on the Model Y by 2,000 euros in some parts of Europe on March 22 and by $1,000 in the U.S. by April 1.
The move seemed to be a sign of confidence from the company or a shift in strategy to prioritizing profits. However, Deutsche Bank said the move was a ploy to increase first-quarter sales since prices would go up after the quarter ended.
Image source: Tesla.
April is just getting started, but Tesla is already down 5% after posting disappointing deliveries for the first quarter.
Tesla’s deliveries fell 9% from the quarter a year ago to 386,810, and it produced 433,371 vehicles. It blamed weaker-than-expected production numbers on the ramp of its updated Model 3 and shutdowns related to supply chain delays from the Red Sea attacks and the aforementioned arson near its Berlin factory.
Tesla will report its full first-quarter earnings on April 23, which is likely to show declines in both revenue and profits.
While it would be a mistake to count out Tesla over the long term, investors seem to be in store for a challenging 2024. In fact, Tesla was the worst-performing S&P 500 stock in the first quarter.
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Citigroup is an advertising partner of The Ascent, a Motley Fool company. Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Jeremy Bowman has positions in Wells Fargo. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
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