Evaluating Tesla’s Market Performance and Prospects
In modern culture, Tesla isn’t just a company, it’s a symbol of innovation and commitment to environmental sustainability, while its founder and CEO, Elon Musk, stands as one of the most renowned and influential entrepreneurs of our time. Tesla is a leader in the electric vehicles and alternative energy sector, thanks in part to the “Musk effect”. Musk’s sound business practices led him to establish a company focused on producing vehicles that are fast, comfortable, environmentally friendly, and relatively affordable for the masses.
However, Tesla’s journey hasn’t been without challenges. There have been incidents involving Tesla electric vehicles resulting in injuries or fatalities. The company has faced lawsuits related to incidents where active driver assistance systems were engaged. One notable recent case involved a Tesla Model 3 crashing into a tree in California. Tesla successfully defended itself in court against the deceased driver’s relatives. But this news had a negative impact on the company that experienced a disastrous previous quarter.
Tesla’s stock price plummeted by 10% after its financial report and has been declining ever since. On October 31, Tesla’s shares closed at $200.84, marking a 19% decline over the past month. To regain its footing, Tesla’s profitability needs to match that of companies producing traditional internal combustion engine vehicles. Consequently, it’s likely that traditional automakers will focus more on enhancing the appeal and profitability of their vehicles while possibly scaling back their electric vehicle production plans. Despite these challenges, Tesla remains a dominant force, owning nearly 20% of the global electric car market and over 50% of the U.S. electric car market.
In general, Tesla’s third-quarter report has been quite disappointing, even though Elon Musk had previously cautioned investors about the global economy’s state, including rising interest rates and potential challenges in producing the Cybertruck. One could say that it’s one of the most disheartening reports in recent years and the “Musk effect” is likely to impact other companies in the sector, possibly leading to higher oil prices. So, it might be worth to monitor upcoming earnings to check if this assumption is correct.
For the first time since the beginning of June, Musk’s wealth has fallen below the $200 billion mark and continues to decline. This was anticipated since he owns 13% of Tesla shares. Given the current unfavorable climate, we might expect further declines.
Despite these financial setbacks, Elon still remains the world’s richest person. While Tesla faces its share of problems, it’s far from the end of the road. The company must aim to restore its stock price to around $210 for a potential rebound and growth opportunity. It is better to limit the visible decline to a level of around $180, as that could open the door for bearish market dynamics to revisit the April 26, 2023 low.
Overall, Tesla remains a leader in electric vehicle production and the development of alternative energy sources. The company continues its work on new products with a steadfast commitment to making the world more eco-friendly and safe for future generations. While challenges exist, there is reason to believe that Tesla will find solutions to its current difficulties.
