New year, old problems: After a disastrous 2022, the Tesla share has returned from the New Year break with a pitch-black trading day. On January 3, the price of the electric car pioneer plummeted by more than 12%. As a result, Tesla lost close to USD 50 billion in stock market value, which is roughly equal to the entire capitalization of rival Ford Motor. Before the sell-off, Tesla had published its latest sales figures: The company delivered 405,728 vehicles in Q4 2022. Tesla thus missed the average analyst estimates of 431,117 cars by a wide margin. For the full year, more than 1 million vehicles were delivered for the first time (see chart). However, at 40%, growth fell well short of the 50% target set by CEO Elon Musk. In 2021, Tesla had still been able to grow by almost 90%. The e-car manufacturer, which has long been spoiled by success, is therefore not immune to the general problems of the sector. In addition to various supply bottlenecks, the difficult macroeconomic environment and, in particular, declining demand from China are slowing down car producers.
The CEO's "sideline activities" are also a factor for the Californians. The focus is on his involvement with Twitter. Since Elon Musk completed the USD 44 billion acquisition of the short message service at the end of October alone, Tesla's stock market value has shrunk by around USD 370 billion. On the one hand, share sales by the top manager are weighing on the listing. To finance the Twitter transaction, Musk has shed Tesla shares. In addition, Wall Street is concerned that the purchase could distract the CEO from his duties at the automaker. There is unlikely to be a shortage of challenges at Tesla in the new year. At the moment, the company is trying to boost demand with price cuts. On Epiphany, Tesla announced its second reduction in less than three months for the Chinese market. In addition, the automaker is granting discounts on the best-selling Model Y and Model 3 in Japan, South Korea and Australia.
In December, Elon Musk had mentioned such a step. He explained at the time that the sharp rise in interest rates had affected the affordability of all vehicles - new and used. In any case, the company's latest move is likely to further fuel the price war in China, the world's largest car market - and put pressure on its own margins. In this respect, it is not surprising that several research houses reduced their price target for the NASDAQ stock at the beginning of the year. Nevertheless, the majority of analysts continue to give the thumbs up. Reuters has compiled a total of 42 ratings for Tesla. Of these, 25 are "Strong Buy" or "Buy." While 13 experts see the volatile stock as a hold, four others advise selling. What is certain is that the valuation of Tesla has come back in the course of the correction: currently, the price-earnings ratio based on the profit expected for 2023 is around 22. Last year, the large cap still started with a triple-digit P/E ratio.
In view of a steep downward price trend, many investors are nevertheless likely to shy away from an entry. The new capital protection certificate with participation could offer an interesting investment alternative. At maturity after twelve months, Leonteq provides a full guarantee for the USD 1,000 denomination. Should Tesla turn upwards by then, holders of the product would profit from the price increase. The participation rate is 100%. However, this mechanism switches off as soon as the underlying reaches or exceeds the barrier at 150% of the initial fixing on a closing price basis during the term. Even in this case, investors do not go away empty-handed. In fact, Leonteq would transfer the rebate coupon of 5% in addition to the full denomination. In short, with the product, also called "Shark Note" in reference to the payout profile, investors can bet on a rebound in Tesla while literally wearing their seatbelts. Please note, however, that the outlined mode of operation only takes effect upon expiration. During the term, various factors influence the value of the certificate and it may well come to prices below the capital protection level.
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