2022 was a miserable year for investors in the Nasdaq Composite (^IXIC 0.89%). The index fell 33%, posting its worst annual decline since the financial crisis in 2008 and breaking a streak of three winning years in a row from 2019 to 2021.
The reversal of fortune for Tesla (TSLA 3.47%) shareholders played a key role in the Nasdaq's broader decline, as the electric vehicle (EV) stock plunged 65% during 2022. Now that a new year has begun, investors want to know whether the Nasdaq will be able to bounce back -- and whether Tesla is likely to play a leading role or will keep holding back the growth-heavy index in 2023.
On the first trading day of 2023, Tesla shareholders didn't seem to have much confidence that this year would be better than last year. Even as the Nasdaq gained ground in premarket trading, Tesla shares suffered another sizable drop as a combination of factors hit the EV pioneer's stock.
NASDAQ: TSLA
Key Data Points
Another delivery disappointment
Tesla's stock moved lower by 4% in premarket trading on Tuesday morning. The move lower came after the automaker revealed its fourth-quarter production and delivery volume figures, with many shareholders not liking the numbers they saw from Tesla.
To be clear, Tesla hit new records with the volume it posted. The company made nearly 405,300 deliveries during the months of October, November, and December, which was up from around 343,800 vehicles delivered in the third quarter of 2022. Production was even more impressive, with Tesla building more than 439,700 vehicles during the fourth quarter.
As a result, Tesla closed the year with strong growth. The automaker produced around 1,369,600 electric vehicles in 2022, and it delivered more than 1,313,850 of them. That marked gains of 40% year over year on the delivery front and a 47% rise in production from what Tesla achieved in 2021.
Tesla investors didn't seem impressed. Those following the stock had anticipated Tesla would manage to deliver more vehicles during the fourth quarter. Moreover, Tesla itself has said that it aims for long-term annual unit sales growth of 50%, and so both the delivery and production numbers fell short of the goals that the automaker had set for itself.
A short explanation fails to inspire confidence
Once again, Tesla's delivery numbers lagged its production volume. That's particularly troubling because deliveries should have had a 22,000-vehicle boost because of delays from the third quarter. If those already-produced vehicles got delivered at the beginning of the fourth quarter, then the difference of 34,400 units between delivery and production actually represents something closer to 56,000 units caught up in logistical issues toward the end of December.
Tesla's press release said only that its transition toward more localized vehicle manufacturing led to an increase in vehicles in transit at the end of the quarter. That didn't answer concerns about when the issues will get resolved or why last quarter's delivery shortfall didn't at least partially reverse itself.
Is Wall Street losing confidence in Tesla?
Meanwhile, professional stock analysts were quick to criticize Tesla's latest results. Analysts at J.P. Morgan cut their price target on the automaker by $25 per share, setting a new target at $125. They pointed to sales incentives and reductions in vehicle pricing in key markets including the U.S. and China as signs of weak demand, and they believe Tesla's margins are likely to fall when the company releases full fourth-quarter financial results later this month.
If weaker margins cause growth to slow, then Tesla stock could continue to see its multiples to earnings drop further in 2023. Economic concerns in the U.S. and abroad could also weigh on Tesla if they blossom into a full-blown recession or major slowdown. Yet for long-term investors, the key is whether Tesla's ambitious growth plans not only in EVs but in adjacent technology will produce new revenue streams to bolster its core car business. If that happens, then the big drop in Tesla stock could end up looking like a huge bargain opportunity.
