As electric car sales slump, Tesla shares relinquish a year's worth of gains
Tesla shares on Thursday dipped below $150 a piece, relinquishing a year's worth of gains as the automaker struggles with decelerating electric vehicle sales and mounting competition.
Continuing a dismal year for Tesla investors, the stock on Thursday fell $5.52, or 3.5%, to close at $149.93, leaving shares down more than 39% this year. The stock last traded at the $150 level in January 2023.
Tesla sales plummeted last quarter as competition increased and EV sales slow. The company said it delivered roughly 387,000 vehicles from January through March, undershooting analyst forecasts and nearly 9% below the 423,000 it sold in the year-ago period.
With Tesla hitting a soft patch, news surfaced this week that the company plans to cut at least 10% of its global workforce in a bid to cut costs. "There is nothing I hate more, but it must be done," Tesla CEO Elon Musk wrote in a memo to staff. "This will enable us to be lean, innovative and hungry for the next growth phase cycle."
Tesla on April 23 is expected to report a drop in first-quarter earnings, and Wall Street will be looking for answers on the company's conference call. Tesla is also under pressure to deliver on its previous pledge to roll out a more affordable EV, dubbed the Model 2, amid reports the project is delayed.
"We need to hear the rational for the cost-cutting, the strategy going forward, product roadmap and an overall vision from Musk, otherwise many investors might head for the elevators during this category 5 perfect storm of weak demand that Tesla is seeing globally in 2024," Wedbush Securities analysts said in a report.
Electric vehicle sales rose only 2.7% to just over 268,000 in the first quarter, down from the 47% jump that fueled record sales in 2023, according to CBS News Detroit.
For Musk, the timing of the planned layoffs of thousands of workers is awkward. Tesla also filed this week to have shareholders vote again on a controversial $56 billion compensation package awarded to Musk for 2018. A Delaware judge voided the pay arrangement in January after lawyers for shareholders argued that Musk had set the terms in sham negotiations with directors beholden to him.
In a proxy filing on Wednesday, Tesla also stated it would hold a vote on moving its state of incorporation to Texas from Delaware. Tesla is set to hold its annual shareholders meeting on June 13.
—The Associated Press contributed to this report.