June 7, 2023

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Tesla's Musk says the recession could last into 2024

Tesla’s Musk says the recession could last into 2024

(Reuters) – Tesla CEO Elon Musk said on Friday he believes the recession will last until the spring of 2024, after earlier saying that “recessions of some kind” in China and Europe were weighing on demand for its electric cars.

Just a guess, but maybe until spring 24,” Musk said on Twitter after being asked by a user how long the recession would last. It was not clear if Musk was talking about a global recession or expanding on the comment he made on Wednesday on China and Europe.

Tesla Inc. stock (TSLA.O) It fell 6.6% to close at $207.28 Thursday, a day after Musk told analysts on a conference call that weakness in China and Europe is causing demand to be “a little bit tougher than it would be.”

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At least six brokerages have lowered their price targets on the stock, with Tesla bull Wedbush Securities making the largest reduction of $60 to bring the price target to $300. Tesla’s third-quarter revenue on Wednesday missed analyst estimates.

While Musk told analysts that Tesla has “excellent demand” for the current quarter, the electric vehicle maker said it will miss its annual delivery target due to limited transmission capacity.

Musk flipped on demand during a conference call in July, initially saying that macroeconomic uncertainty could have some impact on demand for its electric vehicles, but when pressed by an analyst for details, he said the company had no problem with demand but production problem.

Musk said he has a “very bad feeling” about the economy and that Tesla needs to cut about 10% of staff, according to a June email seen by Reuters. Later, he said the reduction would only apply to salaried workers.

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Tesla shares have lost more than a third of their value so far this year. It fell as much as 9% to a 16-month low on Thursday.

“The results are likely to add to discussions about the ensuing demand destruction after third-quarter deliveries that came in 5% below the consensus collected by the company,” JPMorgan said in a report.

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Tesla missed forecasts for auto gross margin on Wednesday, as costs to ramp up production at its new plants in Berlin and Austin slipped.

“Obviously the optimistic narrative is hitting a rough patch as Tesla must now once again prove to the street that the story of robust growth is facing a myriad of logistical issues rather than ordering a softening,” said Wedbush analyst Daniel Ives.

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Additional reporting by Tayashi Datta, Akash Sriram and Anne Maria Shipu in Bengaluru and Hyungu Jin in San Francisco; Editing by Shunak Dasgupta, Matthew Lewis and Savio de Sousa

Our criteria: Thomson Reuters Trust Principles.