Elon Musk, the CEO of Tesla (NASDAQ: TSLA), stated earlier this week that “a recession of sorts” was affecting demand for its electric vehicles in China and Europe. But on Friday, Musk said that he thinks the recession will last until the spring of 2024.
On Twitter, Musk responded to a person who asked him how long the recession would endure with, “Just guessing, but probably till spring of ’24.” It was unclear if Musk was discussing a worldwide recession or following up on his Wednesday remarks about China and Europe.
After Musk told analysts on a conference call that the slowdown in China and Europe was making demand “a little harder than it otherwise would be,” Tesla Inc. shares dropped 6.6% to close at $207.28 on Thursday.
At least six brokerages decreased their price goals for the company; Tesla bull Wedbush Securities made the greatest reduction of $60 to lower its price target to $300. On Wednesday, Tesla’s third-quarter sales fell short of analysts’ projections.
Even though Musk told analysts that the company has “great demand” for the current quarter, Tesla said it would miss its annual delivery goal because it didn’t have enough transportation capacity.
During a conference call in July, Musk made a U-turn regarding demand. At first, he said that macroeconomic uncertainty might be affecting the demand for its electric vehicles. However, when an analyst asked for more information, he said that the company’s problem was with production, not with demand.
In a June email obtained by Reuters, Musk expressed his “very awful feelings” about the state of the economy and the necessity to lay off around 10% of Tesla’s workforce. Later, he clarified that only salaried personnel would be affected by the reduction.
Over a third of the value of Tesla stock has been lost so far this year. They dropped as much as 9% on Thursday, reaching a 16-month low.
According to a report by JP Morgan, “the data will probably add to the discussions about demand destruction that started after 3Q deliveries tracked -5% below company-compiled consensus.”
(https://graphics.reuters.com/TESLA-RESULTS/byvrloorove/chart.png) Tesla’s automotive gross margin is stagnant.
Due to rising manufacturing costs at its new factories in Austin and Berlin, Tesla fell short of forecasts for its automotive gross margin on Wednesday.
According to Wedbush analyst Daniel Ives, “the bullish narrative is clearly reaching a tough patch as Tesla must now demonstrate to the Street that the robust growth story is running into a variety of logistics issues as opposed to demand slowing.”
