Tesla (NasdaqGS: TSLA) shares plunged Friday, dragging down consumer discretionary sector-related exchange traded funds.
On Friday, the Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) fell 3.6%, the Vanguard Consumer Discretionary (NYSEArca: VCR) dropped 3.3%, and the Fidelity MSCI Consumer Discretionary Index (NYSEArca: FDIS) was down 3.5%.
Meanwhile, Tesla shares declined 9.5% on Friday. TSLA makes up 20.7% of XLY’s underlying portfolio, 16.7% of VCR, and 15.6% of FDIS.
“Tesla is mainly down on two things — macroeconomic concerns as people are worried about inflation and recession, and China,” Gary Black, founder, and managing partner at the actively-managed ETF Future Fund LLC, told Bloomberg.
Multiple Wall Street analysts this week have warned about China’s disruptions from Beijing’s zero-tolerance COVID-19 lockdown measures that weighed on Tesla’s results.
Shares of the electric vehicle maker have also been under fire from the broader growth-stock selloff as investors avoided risky assets amid soaring global inflation and recession fears.
While Tesla is dealing with the ongoing supply-chain problems and surging raw material costs, the company has been able to better adapt to the troubles compared to most.
Nevertheless, Morgan Stanley analyst Adam Jonas warned that the supply chain disruptions in China could possibly contribute to a “substantial” miss on deliveries for the second quarter. Analysts’ average projections on Tesla’s second-quarter deliveries were now at around 303,000 units, or 12% lower than the end of March, according to Bloomberg data.
CEO Elon Musk’s high-profile Twitter takeover bid has also added to concerns that he could further pressure Tesla shares when he dumps holdings to scrounge up the cash for the acquisition.
“As long as the Twitter deal is out there, and as long as Tesla’s stock is falling, people worry that Musk will have to sell more stock and would get distracted and not pay as much attention to Tesla as he should,” Black added.
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