Tesla, Apple off to rocky 2024 start. Could things get worse?

The Magnificent 7 member stocks Apple (AAPL) and Tesla (TSLA) have had a rocky start to 2024, to say the least. Tesla shares have fallen over 30% year-to-date, faced recall problems, and many investors have grown weary of outspoken CEO Elon Musk.

Similarly, Apple stock has fallen almost 12% year-to-date while facing multiple downgrades from financial firms and several lawsuits from regulatory agencies.

Yahoo Finance Reporters Pras Subramanian and Dan Howley join Yahoo Finance to break down how Tesla and Apple have had such a shaky beginning to the year and how they may operate going forward.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Nicholas Jacobino

Video transcript

SEANA SMITH: Stocks are climbing higher this morning, snapping the losses that we saw to kick off the second quarter. The S&P 500 had its best start to the year for the first quarter since 2019, up almost 10% since January 1. Meanwhile, though, there's two large tech companies, Apple and Tesla, that have lagged far behind.

To help us break down what went wrong with these two companies and what that tells us here about what's to come in the coming quarter, we've got team coverage for you. Pras Subramanian, Dan Howley here to break it all down for us. Let's start with you.

PRAS SUBRAMANIAN: Hey, Seana, yeah, so we focused a lot on Tesla this week with the EV company missing Q1 deliveries by about 46,000 vehicles and 8.5% drop from last year. But Tesla's problems didn't just begin this week. So far this year, the stock is down over 30% with interest rates remaining high, many consumers are opting not to purchase big ticket items especially with the company slow to spruce up their aging models.

Adding in competitors like China rolling out cheaper EV options and you can start to see why deliveries are down globally. On top of all this, Tesla is currently dealing with an image problem. Many investors have found CEO Elon Musk's attitude and statements to be volatile to say the least. And a litany of investigations related to Tesla's self-driving systems have made the product less appealing to consumers.

Now, investors are looking to that first quarter report on April 23 for some signs of upside. Dan, I know you've been watching Apple. What's going on over there with them in Cupertino?

DAN HOWLEY: Yeah, it has not been a great 2024 for Apple stock so far. It's down almost 12% from the beginning of the year. There's been a few factors that have caused this. It all started at the beginning of the year when three big stock downgrades kicked everything off. Barclays, Piper Sandler, and then Redburn Atlantic all cutting the company within the first 10 days of 2024 on fears of slowing iPhone sales and the potential for regulatory headwinds. We'll get there in just one second.

Then just over a week later, the tech giant was forced to sell a modified version of its latest Apple Watches because of a patent dispute that was over that blood oxygen sensor. Apple then kicked off February with disappointing first quarter results with sales in China down 13% compared to the year prior and forecasting a 5% drop in revenue for its upcoming second quarter. By the end of February, Bloomberg reported that Apple ditched its EV project that had been speculating for 10 years. So sayonara to that.

In March, on the 4th, the EU slapped Apple with a $2 billion fine over its App Store practices. And then on March 21, Apple got hit with an antitrust suit from the Department of Justice, alleging the tech giant monopolized the smartphone market. Now, we're getting reports that Apple is exploring home robot technology. Investors will be looking out to see how the company is looking to innovate. Maddie.