Electric vehicle stocks experienced a significant downturn during the week ending on Jan. 19. The overall market weakness and negative sentiment toward the sector contributed to a pervasive decline. Leading the plunge was Tesla, Inc.‘s TSLA stock, which retracted to its lowest level since Nov. 10, 2023, before slightly recovering.
Key events in the EV space unfolded during the week, including Tesla’s price cuts, declining short interest, and Elon Musk‘s controversial demand for increased voting control in the company.
Tesla Faces Margin Anxiety and Short Interest Decline
Tesla’s decision to implement price cuts sparked concerns about its profit margins just prior to the earnings release. This move led Future Fund Managing Partner Gary Black to revise downward his 2024 adjusted earnings per share estimate for Tesla from $4.20 to $3.75.
Furthermore, data revealed a declining short interest in Tesla stock following the 2023 rally. Consequently, the company surrendered its status as the most shorted stock to Apple and now holds third place, behind tech giant Microsoft.
Musk also caused a stir when he expressed his desire for about 25% voting control in Tesla, seemingly as a precondition to spearhead advancements in artificial intelligence and robotics. This statement elicited criticism from CNBC Mad Money host Jim Cramer, who condemned Musk’s demand as petulant.
Rivian’s Downgrade and Ongoing Losses
Rivian Automotive, Inc.’s RIVN stock plummeted over 14% after Deutsche Bank downgraded it from “Buy” to “Neutral” and lowered its price target from $29 to $19. The firm expressed concerns about potential downside risks to its 2024 volume and gross margin estimates for the company, predicting sustained and significant losses until at least the third quarter of 2024.
Fisker Grapples With Braking Issues Probe
Amid reports of braking issues with the 2023 Fisker Ocean, Fisker, Inc. FSR announced its full cooperation with the National Highway Traffic Safety Administration’s preliminary evaluation. The company also highlighted its software upgrade for the regenerative brake system through an over-the-air update in response to customer feedback. It ensured that the Fisker Ocean brake system meets or exceeds all US and international performance requirements.
The KraneShares Electric Vehicles and Future Mobility Index ETF KARS concluded Friday’s session with a 0.41% decline, closing at $21.80. Over the week, the ETF experienced a 6.40% decrease, according to Benzinga Pro data.