Tesla shares sink as sales wobble – a buying opportunity for investors?

Tesla shares fell in overnight trade after the electric vehicle manufacturer released disappointing sales figures.

The EV maker’s shares closed down 4.9% at $166 after announcing a 20% drop in sales as the continues to struggle with falling demand for its vehicles.

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While a number of factors influence sales at Elon Musk’s Magnificent 7 tech company, investors are appearing to grow tired of faltering sales as the share price continues to decline.

“Ongoing disruption in the Red Sea is just one of the production issues plaguing Tesla, which have contributed to a 20% drop in sales quarter on quarter, with deliveries of just under 387,000 vehicles coming in significantly below market expectations,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“Tesla may have pulled off the tricky manoeuvre of stealing back the crown as the biggest seller of electric vehicles from Chinese rival BYD, but it’s not been enough to arrest a sharp fall in the share price as investors expressed disappointment with the deliveries number.”

Despite earning a place as a ‘Magnificent 7‘ tech stock, Tesla’s stock performance has not lived up to the title.

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Tesla shares are down 14% over the past year, by far the worst of the ‘Magnificent 7‘ that includes, Microsoft, Apple, Meta, Alphabet, Nvidia and Amazon. For context, Meta is up 133% over that period.

Tesla’s efforts to push into AI are compounding problems for the car maker, as spending on AI erodes margins already under pressure from falling sales.

“The fabled Magnificent Seven group of tech giants is now splintering off as a playground style popularity contest evolves, based largely on firms’ artificial intelligence credentials,” Streeter explains.

“As the famous five of Nvidia, Meta, Microsoft, Amazon and Alphabet head off on an AI adventure, Tesla and Apple still appear to be searching for the right clues to take advantage of this new world of opportunity.”

Although yesterday’s sales number and Tesla’s general financial performance don’t make for pretty reading, Elon Musk has consistently produced innovations that gain commercial traction. We will learn more about Tesla’s AI endeavours in due course, and loyal long-term investors will hope for another Musk triumph.

Those who liked Tesla at $200 will love it at $166 after yesterday’s drop. 

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