Tesla in trouble as stock stalls 6% 🏎
Profit problems? Tesla delivered a record 440,808 cars in Q1. But investors are concerned that they’ll have to cut prices to drive sales, potentially eating into company profit. So why does Tesla keep lowering its prices?
Recession hurts demand: In January, Elon Musk warned investors he expected a "pretty difficult recession" to hurt demand this year. To keep demand high, car prices have continually been lowered, but it seems investors are worried this will affect profitability.
Fierce competition: Tesla faces stiff competition from ‘legacy’ car manufacturers (think Ford, GM & VW). Unlike Tesla, these companies can afford to take a hit in profitability as they have more cash to fall back on. Problems don’t end there though; there will also be 150 new EV companies launching in China alone this year.
Plug Power falls 5% as it catches a downgrade
Stock downgrade: Hydrogen fuel company Plug Power was downgraded this week from a ‘buy’ to a ‘hold’ recommendation by major investment firm Morgan Stanley, costing a lot of investor confidence.
Price drop: Morgan Stanley’s analyst, Andrew Percoco, lowered his prediction for the stock's value from $35 to $15. It’s not all bad news though, as the reduced price target still suggests a 35% upside from current stock price.
A market rally, for some: So far this year the S&P 500 is up 8%. But Plug Power is down 9% thanks to fourth-quarter revenue trailing expectations. Are investors starting to plug their money into other opportunities instead?
Etsy stock adds 4% to its basket 🧺
Let me upgrade you: We’ve seen what happens when a stock’s status is downgraded, but what about when it’s upgraded? Etsy shares climbed 4% thanks to investment banking company, Piper Sandler, upgrading its status.
Target price raised: Piper raised its prediction on Etsy stock by around 30% to $140 per share. Analysts believe the company’s active buyers "can re-accelerate over the medium-term, powering share price”.
A gen Z favourite: Piper's 45th Gen Z survey found Etsy to be one of Gen Z’s favourite sites. Piper said “sustainability, intention, and personalisation fit well into core values of Gen Z and millennials and are key differentiators vs other retailers”.
What have we learnt this week? 🤓
The future of the EV market is wide open: Whilst Tesla are undoubtedly market leaders, ‘legacy’ brands have cash reserves which will allow them to take a hit in terms of profitability as automakers steer through difficult economic times
Investment firms are powerful: Companies like Morgan Stanley and Piper Sandler have the power to change investor perceptions overnight. If it alters a stock’s status, the investing world listens, and often acts accordingly
Gen Z are powerful: If Gen Z favours a company, the stock market will factor this in and it will be reflected in a company’s share price
*Figures correct as of April 5th 2023.
Past performance does not guarantee future results. Capital at risk when investing.
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