You’re here (NASDAQ:TSLA) Investors have had a rough start to 2024. The stock is down nearly 30% year to date, although returns have more than doubled in 2023. But in recent weeks, News continued to pile up and investors took their profits from last year and sat back. on the sidelines.
Stocks fell again today, as much as 7%. As of 12:30 p.m. ET, Tesla stock was still down 3.8% in early trading this week.
Cold, rain and snow (and electric vehicles)
It was not just profit taking that led to investors selling Tesla shares This year. Several other elements snowballed and called into question Tesla’s future prospects. Amid multiple examples of extreme weather that have heightened consumer concerns about electric vehicle (EV) ownership, the company itself has come under fire.
Last week, a Delaware judge ruled against the company in a lawsuit that has now overturned CEO Elon Musk’s lucrative compensation approved in 2018. A shareholder sued the company, claiming that the salary package of nearly $56 billion had not been fairly presented to investors and that Tesla’s board did not act independently Like it should be.
But the share price decline may have more to do with two major weather events that resulted in media coverage highlighting some concerns about electric vehicle ownership. Many consumers don’t yet have the experience of driving one, or even knowing an owner. So when a deep freeze hit the Midwest last month and Chicago-area Tesla owners couldn’t charge batteries in weather with temperatures well below freezing, some industry observers thought that this could delay the pace of electric vehicle adoption. Today, a major weather event underway in Southern California has caused power outages that will leave some electric vehicle owners without the ability to charge their vehicles.
Electric vehicle adoption could suffer
The truth is that these weather events are rare and there are steps all vehicle owners can take to prepare for them. But there’s a learning curve with new technology like electric cars, and many people who aren’t ready to try one may be even more uncomfortable with the challenges caused by extreme weather.
The irony, of course, is that Elon Musk’s vision is to increase the use of electric vehicles to help stem the impacts of climate change. But Musk’s credibility has been damaged by the announcement that his board of directors is working to listen to him. There will be more to come regarding the lawsuit over Musk’s pay package. But some investors see a potential slowdown in electric vehicle adoption as a reason to sell Tesla stock now.
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Howard Smith has positions in Tesla. The Motley Fool ranks and recommends Tesla. The Mad Motley has a disclosure policy.
Why Tesla shares fell on Monday was originally published by The Motley Fool
