It’s Tesla’s turn to take the back seat.
The price of shares in electric car maker has plunged almost 15 percent this week in holiday-shortened trading, knocking the company off its perch as the most valuable U.S. automaker by market capitalization. As of Thursday’s close, Tesla’s valuation was about $47 billion, just behind General Motors at $52 billion.
What’s driving down shares? A bunch of things. Tesla announced disappointing sales and production forecasts. And it faces fresh competition from Volvo, which says it’s going all-electronic starting in 2019. A so-so independent safety rating of its Model S didn’t help matters. And on Wednesday, analysts at Goldman Sachs lowered their forecasts of Tesla’s share price and operating metrics, effectively signaling doubt that the company can disrupt its much older competitors as rapidly as hoped.
Sure, Tesla shares have gone up a ton if you look over the longer time frame. In 2017 alone the stock has risen 45 percent. And over the last five years, it’s up almost tenfold, much better than the U.S. stock market as a whole. The benchmark S&P 500 is up 78 percent over the same timeframe.
But the company’s recent headaches come at a pivotal time, as it tries to ramp up production and launch a new lower-priced vehicle, the Model 3, that will be its first foray outside the luxury market just as overall U.S. car sales are slowing. Oh, and the company is burning through cash fast.
In their downbeat note on Tesla, Goldman Sachs analysts were skeptical about the company’s plans to reach non-luxury buyers.
“We see potential for downside as the Model 3 launch curve undershoots the company’s production targets,” the Goldman team wrote. “This comes as demand for Tesla’s established products (Model S and Model X) appear to be plateauing.”