Tesla, black start to the year: worst stock in the S&P 500
The electric giant is paying the price for Musk's vicissitudes, but also car recalls in the US market and increasing competition
2' min read
Key points
2' min read
It's a bad start to 2024 for Tesla. The electric car giant is in the grip of a series of issues that do not leave investors calm, and the stock has suffered heavily, slipping to a nine-month low and being the worst in the S&P 500 index. Since the start of the year, the stock has slid more than 27%, and Tesla's market capitalisation has plummeted to around $570 billion (burning over $200 billion in value in just under 40 days).
Musk's bad period
.Tesla's stock - the most attentive observers already know - is very much linked to the often bizarre choices of its CEO and founder Elon Musk. It is no coincidence, then, that this collapse on Wall Street comes at a time when Musk himself has come under the media's crosshairs for alleged drug stories. The Wall Street Journal has written in recent days of Musk's investor and top management concerns that his propensity to use drugs is affecting his ability to be an effective CEO. The picture that has emerged from some journalistic enquiries is that of a Musk in trouble because he is an occasional user of cocaine, ecstasy, LSD and mushrooms. Certainly not a nice injection of confidence for investors.
This, of course, has also coincided with other factors: the most obvious one is the growing competition from Chinese electric car manufacturers. Musk himself in recent days described Chinese manufacturers as the 'most competitive in the world', but sounded a big alarm: 'if trade barriers are not imposed, they will demolish most car manufacturers'.
Then there is the technological factor. At the beginning of February, Tesla decided to call almost all electric vehicles sold in the United States for a problem with their dashboard warning lights. This is the largest recall in Tesla's history, affecting up to 2.19 million cars sold between 2012 and 2024, which will receive a software update.
It should also be added that Tesla's decline in 2024 began with a post-earnings slump after the company failed to meet Wall Street's estimates on its quarterly accounts, and escalated with the controversy surrounding Musk when he clamoured for significantly more power within Tesla.
