When Elon Musk sneezes, the entire electric vehicle (EV) sector catches a cold. At least, that’s what’s happened to a range of EV stocks today, which are down considerably on a single headline.
Today’s Musk-related headline comes from comments made in an email leaked by Reuters. The Tesla (NASDAQ:TSLA) CEO said he has a “super bad feeling” about the state of the economy and is looking to shed around 10% of the company’s workforce. Additionally, Musk announced he would be pausing hiring worldwide.
These comments have certainly impacted the growth expectations many investors have for EV stocks across the board. Whether we’re talking about Rivian (NASDAQ:RIVN), Lucid (NASDAQ:LCID), Gores Guggenheim (NASDAQ:GGPI), Nikola (NASDAQ:NKLA) or Fisker (NYSE:FSR), these early-stage EV companies are all seeing significant selling pressure on this news.
While TSLA stock has led the way with declines of approximately 9% in early afternoon trading, most of these EV stocks are down between 6% and 8% at the time of writing.
Let’s dive more into what these comments may mean for these EV companies.
Why Are EV Stocks Down Today?
For investors in the sector, Tesla is generally considered to be the gold standard upon which most EV stocks are assessed. This company has paved the way for most of the names on this list to exist. Indeed, the ability to raise capital over the past decade may not have been possible without Tesla’s success.
Accordingly, when Elon Musk says a storm may be on the horizon, many investors take cover. In some ways, these comments may be expected. After all, the economic outlook from most experts aligns with that of Musk.
However, the implication many investors get when reading between the lines on this email is that Musk may believe demand has peaked. For EV stocks predicated on continuously rising revenues, this could be the kiss of death — even more so for companies that are still getting off the ground.
Perhaps the market has overreacted today. It wouldn’t be the first time. However, these comments have rightly stoked additional concerns around valuations. As if investors didn’t need another headwind, they received it today in the form of this Elon Musk take.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.