Tesla’s $350 billion stock meltdown dashes investors’ expectations

(Bloomberg) — Tesla Inc. shares have shown signs of life in recent days after this year’s extreme decline, but investors lack the clarity needed to bet on any lasting recovery.

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The electric vehicle maker is scheduled to provide its first-quarter delivery numbers as early as next week and sharply falling estimates over the past month suggest a weak report. More importantly, recent news flow suggests that demand for its cars will remain low in the coming months.

“Delivery estimates have been cut a lot, and that has really eroded investor confidence in the name. “It will be hard to turn the first-quarter numbers into a positive, even if they were slightly better than expectations,” said Nicholas Colas, co-founder of Datatrack Research. “Valuations are often tied to a company’s weakest link. In Tesla’s case, that’s the automotive business.”

There are many reasons for stocks’ disappointing performance this year — down 28% through Wednesday compared with a 10% gain for the S&P 500 index. However, the biggest cloud looming over the EV giant is the slowdown in demand for electric vehicles, which is coinciding with increased competition from legacy carmakers and Chinese rivals.

The soon-to-end first quarter will be one of the stock’s three worst ever. The EV maker is the biggest percentage decliner on the S&P 500 so far this year. The stock has lost all of its gains since mid-May, and has wiped more than $350 billion off its market capitalization since hitting a 52-week high in July. Shares fell again, down 2.3% in early trading Thursday.

Expectations are low. Analysts are sharply raising their estimates for deliveries, revenue and profit, while the share of bullish ratings on the stock has fallen to its lowest in nearly three years. but more importantly,…

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