Tesla (NASDAQ:TSLA) stock is experiencing a sharp decline at the start of the new trading week, but the reasons behind this drop are more related to macroeconomic factors rather than issues specific to the company.
Despite CEO Elon Musk predicting over $100 billion in revenue on a recent podcast, the stock is still facing challenges. This forecast slightly exceeds the 2024 consensus analyst estimate of $99.44 billion and is higher than the $96.77 billion projected for 2023.
However, 2024 has been a tough year for electric vehicle (EV) stocks, with TSLA down approximately 20% year-to-date. Increased competition in the industry and consumer preference for hybrids over EVs due to range and charging concerns are contributing to this decline.
TSLA Stock Decline Linked to Recession Concerns
As both the S&P 500 and the Nasdaq 100 are in negative territory, most stocks are seeing significant drops today. This has raised fears of a recession following a weak jobs report released last week, which showed nonfarm payrolls growing by only 114,000 in July, well below the expected 185,000.
The recent poor economic data has triggered the Sahm Rule, which suggests an impending recession when specific criteria are met. While economist Claudia Sahm acknowledges the potential for a recession, she believes there is room to maneuver by adjusting interest rates.
Additionally, the Japanese Yen carry trade is putting pressure on US equity prices. This trade involves borrowing a low-interest currency to invest in a higher-interest currency, and with the Yen appreciating against the US dollar, investors are unwinding their positions.
Overall, the combination of economic uncertainty, weak job numbers, and global monetary policy changes is impacting Tesla’s stock performance and the broader market.
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