File photo of a Tesla electric car at the Auto Shanghai show in Shanghai
(Reuters) – Tesla shares, which have lost nearly 70% of their value since the start of the year, the worst performer among the technology division and growth stocks on Wall Street, are expected to fall again on Wednesday after falling 11.4%.
Futures contracts indicate that the title of the American automaker specializing in electric vehicles should fall 3.4% to $105.40 in early trading on the New York Stock Exchange.
On Tuesday, the stock fell to $109.1 at the close, the lowest level in just over two years, in response to a Reuters report that Tesla plans to further cut production at its Shanghai plant in January, raising concerns about a drop in demand in China, the world’s largest car market.
“There’s no doubt there are concerns about demand,” notes Thomas Hayes, chairman of Great Hill Capital, also referring to the recent lowering of the Chinese electric carmaker’s fourth-quarter delivery forecast. Nine are listed on Wall Street.
According to Thomas Hayes, Tesla is facing a “perfect storm” of high interest rates, tax-loss sales and dumping of some funds that held large amounts of the automaker’s stock.
A tax loss sale is the sale of assets with a loss in value to offset gains on other investments.
Tesla stock, which has lost more than half its value since October, has suffered since its CEO, Elon Musk, took control of Twitter. To finance the takeover of the social network, the billionaire had to sell part of his shares in Tesla.
According to Victoria Scholar, investment director at Interactive Investor, investors fear that Elon Musk is spending too much time on Twitter at the expense of the car group.
Of 41 brokers Refinitiv surveyed for Tesla shares, 24 have a “sell” or higher recommendation, 13 a “hold” or lower, while the median price target is $253.5.
A Reuters survey also shows that prices of used Tesla vehicles are falling faster than those of other manufacturers, weighing on demand for new vehicles from the US group coming off the assembly lines.
(Reporting by Akash Sriram and Bansari Mayur Kamdar in Bangalore; French version by Claude Chendjou; Editing by Kate Entringer)