by Tesla (TSLA) has been a monster stock for much of its history, especially since its stratospheric run from mid-2019 to late 2021. But in 2022, Tesla stock was a big loser and was on track to plummet nearly 52% by November . 22
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That would easily beat the 11% drop in 2016, the only other annual drop since Tesla stock went public in 2010. The sell-off has intensified, with the EV giant losing almost half of its value over the past two months. On Monday, TSLA shares slipped 6.8% to a fresh two-year low, the S&P 500’s worst performance during the session.
Here are some big headwinds for TSLA stock, from Elon Musk’s “Twitter circus” to demand concerns at Tesla.
Annual performance of Tesla stock
| Year | Change in Tesla stock |
|---|---|
| 2010 | 56.6% |
| 2011 | 6.7% |
| 2012 | 18.9% |
| 2013 | 343.8% |
| 2014 | 47.9% |
| 2015 | 7.9% |
| 2016 | -11.0% |
| 2017 | 45.7% |
| 2018 | 6.9% |
| 2019 | 25.7% |
| 2020 | 743.7% |
| 2021 | 49.7% |
| 2022 since the beginning of the year | -51.8% |
China Covid Concerns
Beijing is essentially on lockdown amid the city’s first Covid deaths in months. More restrictions were imposed in China on Tuesday as coronavirus cases climb to official all-time highs.
Controlling the more contagious Omicron variants will be extremely difficult as hundreds of millions of Chinese have yet to contract Covid.
And that’s after China eased restrictions slightly, raising hopes the country would roll back its zero-Covid policy.
Renewed restrictions will continue to cool China’s struggling economy, reducing demand for electric vehicles, including Teslas, and increasing the risk of renewed production disruptions.
Tesla Stock vs. BYD Stock: Which EV Giant is a Better Buy?
Tesla demand
China’s Covid woes are fueling Tesla’s demand concerns, in part due to a big production ramp-up in Shanghai. Tesla has already cut prices in China, but there are local media reports of more cuts before the end of the year, but wait times are essentially zero. Tesla may be banking on a big quarter for sales in Europe, but that could clear backlogs by 2023.
On January 1st, subsidies for electric vehicles will end in China and Norway, while Germany will cut subsidies significantly. Sweden has just ended its EV subsidies, while the UK is ending its scheme. All of this could affect Tesla electric vehicle demand and prices in Europe and China.
This is because China’s EV competition is coming up with more and more models such as BYD (BYDDF), no (NOK), Li car (LI) and more tackle Tesla’s aging Model 3 and Model Y. The European market for electric vehicles is also becoming increasingly dense.
On the other hand, Tesla is eligible for new US tax credits of up to $7,500 per vehicle. Tesla still faces far less competition in its home market than in Europe and China.
The Tesla Cybertruck is expected to start production next year, with Musk anticipating “early” production in mid-2023. However, if the often-delayed cybertruck stays on schedule, bulk deliveries may not begin before the end of the year or in 2024.
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Elon Musk’s Twitter Reign
Tesla CEO Elon Musk has owned Twitter for less than four weeks but seems like it’s been forever. He has cut staff in half while many other employees are leaving. Over the weekend, Musk restored Donald Trump’s Twitter account, but then followed it up with a vulgar meme aimed at the former president. Ad revenue collapses.
All of this has raised concerns that Musk is tarnishing his image. Even longtime TSLA bulls fear it could hurt the Tesla brand.
Musk could also sell more Tesla stock to pay Twitter’s bills. Musk has sold Tesla stock multiple times this year, citing Twitter as the reason for the two most recent batches.
TSLA Stock Follows EV Rivals, Aggressive Growth
Tesla stock isn’t doing well. But it’s not alone. Aggressive stocks had a terrible 2022. Tesla’s EV rivals in particular struggled, including Nio stock, Li Auto, Rivian (RIVN) and BYD. So by that metric, TSLA stock isn’t looking too bad going into 2022. However, BYD was flat in November, while Nio and Li Auto are up this month, while Tesla stock has lost a quarter of its value.
More broadly, it was a bear market for most of the year. While the major indices have recovered from the October lows, they are still significantly down for the year, particularly the Nasdaq.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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