Wall Street Is Getting Nervous About Tesla

But first, the red flags go off.

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The big story

Problem with Tesla

Earnings season is approaching and Wall Street is already sounding the alarm on a leading company.

Analysts worry about Tesla’s first quarter deliveries, writes Beatrice Nolan of Business Insider. Analyst estimates for shipments for the most recent quarter are down 6% from the fourth quarter, according to a Bloomberg survey. Tesla is expected to release the figure today.

Tesla won’t report its full earnings until later this month, but Wall Street is bracing for trouble. Last week, at least three companies lowered its price targets for Tesla. One analyst called the quarter a “nightmare” for the company, while another company called Tesla a “growth company without growth.”

It’s that kind of year for Tesla, which is down 30% in 2024. Shifting demand for electric vehicles in the United States is part of the problem, but it’s not the only one.

China, a key partner and market for Tesla, is becoming one of the the biggest threats to its business. And Tesla’s polarizing CEO Elon Musk has given shareholders headaches with an ultimatum.

It doesn’t help that the group Tesla has been associated with is largely having a good year.

The Seven Mercenaries was one of the biggest stories in the stock market in 2023. The stock prices of the world’s largest technology companies could not stop climbing.

This year, the results were a little more mixed. Nvidia has remained a rocket ship, up more than 85% this year. Meta and Amazon have also seen eye-popping returns, up over 41% and 20% in 2024, respectively.

Microsoft and Alphabet’s stock prices haven’t been as extreme, but both have outperformed the S&P 500, up more than 10% this year.

Even Apple, down more than 8% for the year, is still far from Tesla’s woes. (Apple’s main problem, much like Tesla’s, is linked to its decline in a once favorable market: China.)

It will be an uphill battle for Tesla. Its new product, the Cybertruck, is exactly the type of electric vehicle that buyers aren’t interested in. Instead of big and expensive, data shows the average customer wants smaller, cheaper vehicles.

That’s not to say Musk doesn’t have any tricks up his sleeve. One strategy is to get more Tesla drivers to subscribe to its Full Self-Driving software, which can cost $199 a month. It could strengthen Tesla’s profit margins and get him back into the good graces of Wall Street.

3 things about the markets

1. Trump Media takes a dive. The stock price of former President Donald Trump’s media company fell 26% after an initial increase. The decline came as a new SEC filing showed a net loss of $58.2 million last year, compared to $4.1 million in revenue.

2. Stronger-than-expected industrial data cast doubt on a rate cut in June. Bond market expects interest rate cut in June fell below 50%, according to Bloomberg data. This is the result of the ISM manufacturing index rising for the first time since 2022, another example of the continued strength of the U.S. economy in the face of high interest rates.

3. Check out Ken Griffin’s first investor letter in years. Citadel’s CEO warned investors that 2024 would likely be “tough,” denounced America’s $34 trillion debt mountain and touted the “player-coach” model that shapes his company’s top talent. You can read the full letter here.

3 things in technology

1. It’s too late to stop the AI ​​apocalypse. There are growing fears that AI will disrupt our lives and put people out of work. But what many people don’t realize is how far computerized decision making has already taken root in every part of our existence.

2. Microsoft has scaled back its Teams chat app to focus on its Copilot AI tools. According to a leaked memothe reorganization reduced the number of people working on Teams and created a new central Copilot and “future of work” team.

3. AI giants are scrambling to get their hands on reliable data. Companies like OpenAI and Anthropic are struggling to find enough high-quality data which can be used to train their chatbots. The Wall Street Journal reported that it was instead considering synthetic alternatives.

3 things in business

1. How the businessman who blew up MoviePass tried to create a ‘TikTok killer’ – and cost investors millions. People close to MoviePass Chairman Ted Farnsworth said his plan was to get involved with a publicly traded company, help raise money and push the company’s stock higher. Then everything would implode.

2. More drama from Sports Illustrated. The owner of the iconic magazine filed a complaint on Monday against his former publisher. Authentic Brands Group is seeks $49 million from 5-hour energy drink mogul Manoj Bhargavawhich failed to honor a multi-year agreement to publish SI in January.

3. The Russian central bank helped Putin secure another term. Experts told BI that Bank of Russia Governor Elvira Nabioullina’s policies have helped stabilize the Russian economy in the face of aggressive Western sanctions. However, the former international star of central banks has become as much of a pariah in the Western world as Putin because of his support for his regime.

In other news

What’s happening today

• Forbes’ list of global billionaires will be announced.

• The US presidential primary elections will be held in Connecticut, Delaware, New York, Rhode Island and Wisconsin.

The Insider Today team: Dan DeFrancesco, associate editor and presenter, in New York. Jordan Parker Erb, editor, in New York. Hallam Bullock, editor, in London. George Glover, journalist, in London.