The month, quarter and year that Tesla’s stock has ever experienced are about to end.
TESLA STOCKS HEADED FOR ITS WORST YEAR
- Tesla shares dropped 11% on Tuesday and are now down 44% in December
- Investors are bailing on the stock as challenges mount for Tesla abroad and at home, and as Elon Musk continues to spend an outsize amount of time at Twitter.
- Multiple outlets reported fresh challenges for Tesla production in mainland China, as the automaker struggles to attract buyers in China and in North America.
With the stock ending down 11% on Tuesday, the sell-off in Tesla accelerated. Elon Musk’s electric car company, which has passed Meta to become the worst-performing stock among the most valuable tech companies in 2022, is only days from from finishing its worst month, quarter, and year ever.
The most recent decline follows news from The Wall Street Journal that Tesla will extend a week-long production shutdown at its Shanghai factory due to an increase in COVID cases among its Chinese staff.
According to Reuters, Tesla’s Shanghai plant will reopen in January for just 17 days, which is a departure from the company’s custom. This month, a new wave of COVID infections has devastated Shanghai.
Since reaching a record high in November 2021, Tesla stock has dropped by 73%. In 2022, the stock is down 69%, which is more than twice as much as the Nasdaq. Ford is down 46% and General Motors is down 43% among the big automakers. Tesla has only had one previous year of decline since its IPO in 2010, an 11% decline in 2016.
Musk is selling large quantities of Tesla stock as Twitter is losing money. Musk reportedly sold an additional 22 million Tesla shares in mid-December, for a total transaction value of nearly $3.6 billion, according to documents. On social media earlier this year, Musk informed his countless fans that he had “no additional TSLA sales planned” after April 28.
Musk announced on Twitter on December 22 that he would not sell any more stock for 18 to 24 months following his most recent sale. Musk claimed in a Twitter exchange with a Tesla shareholder that “people would increasingly move their money out of equities into cash, causing markets to decline” as a result of the Federal Reserve raising interest rates.
Investors have not been greatly pacified by his statements. According to FactSet, trading volume on Tuesday exceeded 201 million shares, making it the second-highest day of the year after Dec. 22. Since Dec. 13, Tesla’s best five trading days by volume have all occurred.
Tesla’s stock has dropped 44% in December, which is by far its worst month ever as it had never dropped more than 25% in a single month. Additionally, the stock is down 59% in the fourth quarter, worse than the 38% decline it saw in the second quarter of this year, which was already its worst quarter on record.
Tesla this week increased its discounts for purchasers of its Model 3 and Model Y electric automobiles in North America. These reductions followed incentives the carmaker had earlier in the month in mainland China for December vehicle sales.
The used-car market is also under pressure, as used Tesla prices have fallen 17% from peak levels in July and remain on the market longer than those of other brands.
While this has been going on, Musk has continued to play around with controversy at Twitter, allowing the continuous leaking of internal messages about the company’s previous treatment of COVID and election-related content as well as backtracking on policy changes.
Companies have stopped or stopped running paid advertisements on the platform, which has caused Musk to erupt.
Dan Ives of Wedbush Securities stated in a research on Tuesday that the automaker may face more serious concerns as a result of Musk’s leadership issues.
“Musk is perceived as “asleep at the wheel” from a leadership standpoint at the same time that Tesla is cutting prices and inventory is starting to develop globally in the face of a predicted global recession,” wrote Ives, who kept his buy recommendation on the company.
Tesla shareholders want Musk to redouble his efforts to stabilise the business that makes up the lion’s share of his fortune. Musk relinquished his position as the richest person in the world to LVMH chair and CEO Bernard Arnault earlier this month as a result of the prolonged sell-off. According to Forbes.
Craig Irwin, an analyst at Roth Capital, said, “I think he really has to focus on operations, on bringing us amazing automobiles.” Irwin has a hold recommendation on the company and a $85 price target.
Tesla’s Tuesday closing price was $109.10.