Teachers’ Union Raises Alarm Over Tesla Stock Volatility, Urges Asset Managers to Reassess
The American Federation of Teachers (AFT), representing 1.8 million educators, has expressed serious concerns about the volatility of Tesla’s stock and its potential impact on teacher pensions. In a move to protect an estimated $4 trillion in teacher pension investments, the AFT is calling on major asset managers to reevaluate their positions in the electric vehicle giant.
AFT President Randi Weingarten has sent letters to prominent asset management firms, including BlackRock, Vanguard, and State Street, highlighting the risks associated with Tesla’s declining stock value. The union’s action comes in response to Tesla’s stock dropping 42.5% from its peak, raising red flags about the security of retirement funds heavily invested in the company.
Financial experts have added weight to the AFT’s concerns. A recent JPMorgan commentary cited by the union projects a $135 price target for Tesla stock, significantly lower than its current trading price. This projection, coupled with Tesla’s reported 23% profit decline and 71% revenue drop, has intensified worries about the company’s financial health.
Tesla’s market performance has shown signs of vulnerability, with the company missing fourth-quarter margin expectations. The electric vehicle market leader is also facing challenges in key markets, with declining sales reported in China and Europe. In Germany, a significant drop in sales has been observed, indicating a shift in consumer preferences and increased competition in the electric vehicle sector.
Investor sentiment towards Tesla has begun to shift. Ross Gerber, once a staunch Tesla supporter, has reduced his firm’s position in the company and predicts further stock decline. Other analysts, such as Craig Irwin from Roth MKM, foresee a significant sell-off due to what they perceive as an overvaluation of the stock.
The AFT emphasizes that their actions are not politically motivated but stem from genuine financial concerns. The union has a history of addressing financial issues and has previously taken legal action against government departments led by Tesla CEO Elon Musk.
As the situation unfolds, the financial world watches closely to see how major asset managers will respond to the AFT’s call for reassessment, and what implications this may have for the future of Tesla stock and teacher pension funds.
