- Due to various issues, Tesla’s stock was down over 50% in 2022.
- Hopes are high for a good 2023 with the Cybertruck and Tesla Semi rolling out.
- With a fair price-to-earnings ratio, investors are jumping into the stock in 2023.
Tesla stock is up 14% in 2023, even after missing prior year auto deliveries. Here is a look at the stock’s rocky 2022, the issues the company is facing and whether the current rise in stock price can be sustained moving forward—plus, how Q.ai can help.
Tesla 2022 year in review
Automaker Tesla had a wild year in 2022 as its CEO, Elon Musk, thought it was prudent to take questionable actions that tanked the company’s stock value.
Before that, Tesla was a darling among well-heeled auto buyers who wanted to do their part to help the environment. Until that point, the most controversial aspect of Tesla was its build quality and exorbitant cost of repairs on older models.
Buyers were more than willing to overlook these issues until Musk bought Twitter and used it as a megaphone for his personal views. However, that’s not the only problem Tesla faced.
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Tesla forecasted 50% growth at the start of 2022, but that goal proved challenging as the company became plagued by labor issues and a CEO who decided he could say anything he wanted without consequences. It opened its newest factory in Germany in March but had difficulties attracting enough employees to fill all of the open roles.
The company reported the delivery of 1.31 million vehicles to the market in 2022, a substantial increase of about 40% from 936,172 vehicles in 2021. Even though the increase in production is notable, Wall Street analysts were expecting more.
Q4 of 2022 saw the most pressure on the company as coronavirus outbreaks in China slowed production, deep price cuts on existing models were offered, weakening demand, and increasing competition from legacy automakers affected Tesla’s sales.
Some analysts and retail shareholders agree that Musk’s takeover of Twitter and subsequent antics have not helped Tesla, either.
Tesla shareholders vs. Twitter
Shareholders pinned Tesla’s stock price and success on Elon Musk’s company governance. They felt his seeming laser focus on all aspects of Tesla made the company successful and profitable.
However, Musk’s purchase of Twitter drew him away from the day-to-day operations of Tesla as he tried to recover from his rash decision to buy the social media giant. The deal, completed in late October 2022, saw Musk putting most of his focus on the platform instead of Tesla.
Tesla stock began the year on a high but ended about 65% lower at the end of the year. This precipitous drop in value saw prominent shareholders call for Musk’s return to his duties at Tesla and to leave Twitter alone.
Ross Gerber, the CEO of Gerber Kawasaki Wealth Management, tweeted, “Tesla stock price now reflects the value of having no CEO.” Musk’s response was less than gracious. Many longtime Tesla shareholders have made similar statements to Musk on Twitter and elsewhere.
It is important to know that the market as a whole was down in 2022. The technology-heavy NASDAQwas down close to 33% as investors sold off high-growth stocks over looming recession fears. Many other investor favorites were down significantly in 2022, including Amazon, which was down 51%, and Meta, down 64%.
From Tesla Fans to Tesla Haters
Musk’s unrestrained commentary on Twitter has cost him a substantial portion of his fans and customer base. Many Tesla buyers are center-left Democrats, and Musk has been making statements about favoring far-right policies on Twitter.
Tesla’s traditional customer base is making their feelings public about buying a car from someone they feel is a hypocrite since the far-right ideology is more in line with ignoring the industrial impact on the climate than finding ways to reduce greenhouse gas emissions.
Buyers who once lauded Musk’s revolutionary electric vehicles are turning away from Tesla. They have no problem voicing their feelings as they trade-in or sell their vehicles. In turn, legacy automakers are delivering all-electric cars to the market in 2023 and using over 100 years of experience building finished cars with minimal quality issues. EV buyers now have multiple makes and models to choose from.
What’s happening in 2023
Tesla is moving forward with its plans to build more gigafactories and expand existing ones. It filed to expand its gigafactory in Texas in early 2023 and is seeking to build a plant in Indonesia and Mexico. An expansion of the gigafactory in China is on hold.
The Texas gigafactory is handling expanded production of the Model Y and will also be the site of production for the Cybertruck. Tesla’s Cybertruck is expected to enter early production in the middle of 2023 and reach normal production levels by the end of the year.
There are rumors Tesla will start producing a new model that starts at $25,000 in 2023, which could boost sales if customers put deposits down to reserve the car. In late 2022, the company began to roll out its semi-truck, which should also help increase sales.
Finally, with the reduction in production, Tesla is hoping that its major loss in stock value has generated interest among buyers who feel the stock is value-priced. With above-average growth expected for the company in the coming years, the current stock price is seen as a bargain, which has fueled the increase in stock price.
The stock has recovered about 20% of its value during the first two weeks of 2023, but it remains to be seen how well Tesla will perform in the coming months and if Musk has learned his lesson about arguing with people on Twitter.
The bottom line
After a rough 2022, Tesla stock has rebounded nicely so far in 2023. Time will tell if the rally in stock price is a short-term event due to a fair valuation or if investors will overlook some of the near-term issues with the automaker and keep pushing the stock price higher.
For investors who are unsure of the direction of Tesla’s stock price moving forward, consider investing in Q.ai’s Emerging Tech Kit. This kit uses artificial intelligence to spot trends and chooses investments based on this, hoping to provide investors with above-average returns.
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