Through February 5, Tesla Inc. (NASDAQ: TSLA) was the worst-performing S&P 500 stock for the year to date. Its position has improved slightly since then. The share price remains down 25% for the year, which compares to an S&P 500 increase of just under 4% in that time. What would it take to turn Tesla stock around? Certainly, it would take better financial results and a bigger market share in America and China, which is the world’s largest car market.
Tesla’s revenue rose only 3% in its most recently reported quarter to $25.2 billion. Adjusted EBITDA, which is how Tesla describes its “profits,” fell 40% year over year to $4 billion. Elon Musk has warned that the company’s sales growth in 2024 may be slow. (Here are five reasons to avoid Tesla’s Cybertruck no matter what.)
By some measures, Tesla ranks fifth in market share in China behind four local companies. The market share leader is BYD, which passed Tesla in global electric vehicle (EV) market share last year. BYD sells cars in China for as little as $10,000. Tesla models cost at least twice that much. The company may not pick up market share in China because of this price difference, but it needs to hold its position in the market share race.
Tesla has dominated the U.S. EV market with a market share of 50%. Once again, it has to hold that position. Several major manufacturers produce and sell EVs, but none has a share in double digits. Tesla has cut prices in the United States several times. Its management believes this will drive losses at the large legacy car companies, slowing their investment in the EV sector.
Tesla announces global unit production once a quarter. Those numbers will need to be strong for the first quarter of 2024 if Tesla stock is to reverse its fall.
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