Tesla stock saw a rise on Wednesday following reports of potential layoffs. This positive trend was further supported by Ford Motor.
The stock climbed by 1.9%, reaching $188.41, while the S&P 500 and Nasdaq Composite also experienced gains of 0.8% and 0.9% respectively.
This marks the second consecutive day of growth for Tesla, as the stock rose by 2.2% on Tuesday despite receiving a downgrade. Daiwa analyst Jairam Nathan expressed concerns over corporate governance issues affecting the company, which added to the existing financial challenges faced by Tesla in 2024. Consequently, he downgraded the rating from Buy to Hold and revised the price target down to $195 per share from $245.
Usually, stocks decline after a downgrade, but Tesla has been facing significant setbacks. Year to date, its shares have dropped by approximately 26%, significantly underperforming the Nasdaq Composite by around 30 percentage points.
As investors monitor Tesla's stock performance closely, recent developments indicate that the company may be on the path to recovery.
Tesla and Ford Shares Face Multiple Challenges
There are several factors currently putting downward pressure on shares of both Tesla and Ford Motor Company. The first concern is the falling prices and slowing growth of electric vehicle (EV) sales, which have made investors uneasy. Bloomberg recently reported that Tesla is considering layoffs, which further indicates weakness in the industry. When contacted for comment, Tesla did not respond. It's worth noting that Tesla currently has a global workforce of approximately 140,000 employees.
Ford Motor Company is also feeling the effects of weakening demand for EVs and falling prices. Year to date, the company's shares had already seen a decline of about 1% before Wednesday's trading session.
However, Ford recently reported strong fourth-quarter earnings and presented a positive outlook for 2024 operating profits. The company anticipates a range of potential profits with a midpoint of approximately $11 billion, which is $1 billion higher than what Wall Street had projected. This news came as a relief to investors and suggests that the outlook for the auto industry is not as dire as some had feared.
As a result of these positive developments, Ford's stock rose by nearly 6% in late trading, reaching $12.76 per share.
On the other hand, Tesla's stock is still far below its 52-week high of $299.29, reached last summer. However, on Wednesday, Tesla saw an increase in its stock price along with most of its competitors; Lucid rose 0.9% to $3.53 in premarket trading, NIO fell 2.3% to $5.89, and BYD saw a 1% increase in Hong Kong trading. General Motors also experienced a rise in stock price, increasing by 1.3% to $38.54.
It's worth mentioning that Tesla's trading volume was slightly below its 65-day average volume, with 122.7 million shares traded at Tuesday's close compared to an average of 117.4 million shares.