Tesla Weighs on Consumer Discretionary ETFs
JShares of esla (NasdaqGS:TSLA) plunged on Friday, dragging down exchange-traded funds linked to the consumer discretionary sector.
Friday, the Consumer Discretionary SPDR (NYSEArca: XLY) fell 3.6%, the Vanguard Consumer Discretionary (NYSEArca: VCR) fell 3.3%, and the Fidelity MSCI Consumer Discretionary Index (NYSEArca: FDIS) was down 3.5%.
Meanwhile, shares of Tesla were down 9.5% on Friday. TSLA represents 20.7% of XLY’s underlying portfolio, 16.7% of VCR and 15.6% of FDIS.
“Tesla is mainly down on two things – macro concerns as people worry about inflation and recession, and China,” said Gary Black, founder and managing partner of ETF Future Fund LLC, actively managed, to Bloomberg.
This week, several Wall Street analysts warned of disruptions in China from Beijing’s zero-tolerance COVID-19 lockdown measures that weighed on Tesla’s results.
Shares of the electric vehicle maker were also criticized by a sell-off in growth stocks as investors shunned risky assets amid soaring global inflation and recession fears.
As Tesla grapples with ongoing supply chain issues and soaring raw material costs, the company has been able to adapt to the issues better than most.
Still, Morgan Stanley analyst Adam Jonas warned that supply chain disruptions in China could potentially contribute to a “substantial” lack of deliveries for the second quarter. Average analyst projections for Tesla’s second-quarter shipments now stood at around 303,000 units, down 12% from the end of March, according to Bloomberg data.
CEO Elon Musk’s high-profile takeover bid on Twitter has also raised fears that he could put more pressure on Tesla shares when he dumps his holdings to scrounge up the cash needed for the acquisition.
“As long as the Twitter deal is there, and as long as Tesla shares go down, people are worried that Musk will have to sell more shares and get distracted and not pay as much attention to Tesla as he should. “, added Black.
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