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Tesla’s Journey from Top Carmaker to Underperformer

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Dec. 4 2020, Updated 10:53 a.m. ET

Tesla in the second quarter

In the second quarter, Tesla (TSLA) outperformed its peers and the broader market. The stock jumped 28.9% in the quarter compared to the 2.9% rise in the S&P 500 Index, making it the top-gaining automaker (XLY) in the period. General Motors (GM) also ended the second quarter in the positive with an 8.4% gain. Ford Motor Company (F) and Fiat Chrysler Automobiles (FCAU) fell 0.1% and 7.9%, respectively.

Most of Tesla’s gains in the second quarter happened in June after its annual shareholder meeting. In June alone, TSLA surged 20.4% as its CEO Elon Musk made promises to achieve its Model 3 production goal and to be profitable in the second half.

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Tesla in the third quarter

Despite the company’s meeting its second-quarter Model 3 production goal, as was promised by Musk, its stock traded on a negative note in the third quarter. The stock fell 22.8% in the quarter compared to the 7.2% rise in the S&P 500 Index. With this, Tesla also underperformed its peers GM, Ford, and Fiat Chrysler to become the worst-performing automaker in the period. GM, Ford, and Fiat Chrysler ended the quarter with losses of 14.5%, 16.4%, and 7.3%, respectively.

A number of things hurt investors’ sentiments in the third quarter. We’ll take a look at some of these factors in the coming articles. At the moment, a sustainable near-term recovery in Tesla stock depends on the success of the settlement deal between Musk and the Securities and Exchange Commission.

Series overview

On October 8, Tesla stock fell to its lowest level in the last six months. In this series, we’ll find out whether it’s a good time to considering buying Tesla. We’ll explore the company’s recent fundamentals, including its vehicle production ramp-up, its financial growth, and its future targets. Later in the series, we’ll also learn how TSLA’s valuation multiples are trending.

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