Tesla shares are sinking. Elon Musk’s Twitter deal doesn’t help: NPR



Tesla shares have fallen over the past year as investors worry that CEO Elon Musk is too distracted by his takeover of Twitter.

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Jim Watson/AFP via Getty Images


Tesla shares have fallen over the past year as investors worry that CEO Elon Musk is too distracted by his takeover of Twitter.

Jim Watson/AFP via Getty Images

For several years now, the meteoric rise of Tesla stock has fascinated, excited and mystified Wall Street. But in 2022, that meteor exploded.

Shares of the electric car maker lost 65% of their value in 2022. The company started the new year with another decline, falling 12% in one day after disappointing sales figures were released.

It’s not just bad for investors. It’s also bad for Tesla CEO Elon Musk, who tied most of his fortune to the automaker and is no longer the world’s richest man.

But what made these sales numbers so disappointing? Tesla sets new sales records; increased supplies by 40%. The company continues to dominate the US electric vehicle market, which is growing rapidly as the world tries to reduce carbon emissions that cause climate change.

Here are four reasons why the transformation company’s stock is cratering.

It has been a difficult year for the entire automotive industry

Tesla wasn’t the only one to see its stock values ​​plummet. The stock market as a whole was down in 2022, and every automaker in the auto sector saw their share prices fall. Major players like General Motors and Ford are down about 40%, while startups like Rivian and Lucid are down more than 80%.

All automakers faced the same headwinds (inflation, rising interest rates) that the broader economy faced.

They also started 2022 with a parts shortage that kept dealer lots unusually empty, and ended the year with high transportation costs that could turn away potential buyers.

US auto sales hit a decade low in 2022, according to estimates by Cox Automotive.

And Tesla’s sales may have grown 40% in 2021, but they still fell short of both ambitious growth targets and analyst expectations.

Tesla is facing new competition for electric car sales

Despite a tough year for the wider auto industry, electric car sales rose last year. And Tesla continues to dominate the electric car market.

Bad news for Tesla? Competition is rising. At the high end of the market, familiar names such as Mercedes-Benz, BMW and Audi, as well as Lucid, Rivian and Polestar, are starting to cut into the territory of Tesla’s more expensive models.

“We have a bunch of cars that compete on par with Tesla because they’re performance-oriented,” says Brian Moody, executive editor of Autotrader.


Brand new Tesla cars sit in a parking lot at the Tesla factory in Fremont, California in October. Tesla stock has lost 65% of its value in 2022.

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Justin Sullivan/Getty Images


Brand new Tesla cars sit in a parking lot at the Tesla factory in Fremont, California in October. Tesla stock has lost 65% of its value in 2022.

Justin Sullivan/Getty Images

Meanwhile, the likes of the Kia EV6, Ford Mach-E, and redesigned Chevy Bolt are starting to chip away at the mass market for EVs. There is also growing competition in China, a critical market for Tesla and other automakers.

According to S&P Global Mobility, Tesla still accounts for 65% of electric vehicle sales in the US. But the interest rate goes down, the stock market doesn’t like it.

Elon Musk’s takeover of Twitter is a headache for Tesla

Musk has managed many companies over the years. But his acquisition of Twitter last year isn’t like he’s running SpaceX, for example.

The aura around Musk — to his fans, a genius and a visionary — is part of the reason so many people want a Tesla. Now Musk has become a professional Twitter troll, posting provocations and gleefully embracing some right-wing positions from his powerful perch atop the social media giant.

A survey by Morning Consult found that between October and November 2022, Tesla’s net favorability fell 20 percentage points among Democrats and rose 4 points among Republicans. This could affect sales, as liberal voters want to buy more electric cars.

Musk also had to sell billions of dollars in Tesla stock to take over Twitter, which hurt the stock. Musk has seen his personal fortune drop dramatically, though he still has more than $100 billion in cash.

Meanwhile, much to the consternation of some of his most ardent supporters, his time on Twitter is cutting into Musk’s Tesla time.

Many Tesla investors are encouraging Musk to name Twitter’s new CEO and say he will step back from the social media company.

“Or the excruciating pain will continue,” said longtime Tesla fan analyst Daniel Ives, who criticized Musk’s handling of the Twitter purchase.

It turns out that Tesla is a car company

Another possible explanation for why Tesla stock is down so much: It was simply overpriced to begin with, and now it’s trading at more realistic levels.

For a while, Tesla traded like a high-flying technology stock rather than a commodity maker.

Musk himself encouraged it, calling Tesla a “software company.” The stock price has soared that the word “stratospheric” has been thrown around a lot because it can’t be justified based on Tesla’s revenue or production numbers.

Now prices are nearing the floor for Tesla and similar tech companies on Wall Street.

So Tesla as a stock has had a terrible year. But as a company that actually makes cars — physical things that people buy and drive — Tesla managed to sell 1.3 million of them in 2022.

That’s especially impressive given the supply chain struggles plaguing the entire industry.

Looking ahead, there is plenty of room for Tesla to continue to grow, even with more competition.

“Their volumes are still going to grow and they’re still going to make money,” predicts Stephanie Brinley of S&P Global Mobility.

Note that even after Tesla lost $700 billion in value yet the world’s most expensive car manufacturer.



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