Shares of electric car maker Tesla fell to a new 52-week low on Tuesday, closing around $138 a share, or down 8% for the day on an otherwise mixed day for stocks.
CEO Elon Musk has tried to blame the price drop in part on macroeconomic factors.
Taurus Tesla is longtime Ross Gerber he wrote in a tweetTesla’s stock price now reflects the value of not having a CEO. Great job Tesla BOD – time for a change. Tesla dollars.” Gerber launched an informal campaign to get his fellow shareholders to vote to appoint him to the Tesla board.
Musk replied: in a tweet“As interest rates on a bank savings account, which are secured, begin to approach stock market returns, which are unsecured, people will increasingly convert their money from stocks into cash, causing stocks to fall.”
But Tesla stock has fallen more than other major automakers since Musk announced his plans to buy Twitter in April 2022. Since that date, Tesla shares are down 59%, compared to 26% for Ford and 12% for General Motors. The S&P 500 is down 14%.
The Tesla boss has plenty of distractions, notes Gerber: Musk has been courting controversy as the new owner and CEO of Twitter, the social media giant he acquired in a leveraged buyout in late October, and he’s also the CEO of a major defense contractor, SpaceX. .
Musk sold billions of dollars of his Tesla holdings to fund the Twitter deal, including a $3.6 billion sale earlier this month.
He told Twitter employees he sold Tesla stock to “save” their business while he was about to cut more than half of the staff at the company and roll out a raft of product and policy changes, some of which he later reversed.
While Musk has been focusing on his new role as “Head of Twit” since late October, Tesla has been offering discounts and incentives to sell cars in China, where it operates a major factory in Shanghai; struggling to make its new plants in Austin, Texas, and Brandenburg, Germany, efficient; And facing persistent supply chain challenges endemic to the auto industry, coupled with high energy prices in Europe could reduce the attractiveness of the battery electric vehicle for many drivers.
These, among other challenges, prompted Mizuho Securities and Evercore ISI to cut price targets for Tesla on Tuesday.
“In the near term, we see potential weakness in Tesla sales as a weaker overall and consumer headwind could result in lower demand for higher-priced electric vehicles,” Mizuho Securities analysts wrote in a note. The company remains bullish on Tesla for the long term, citing the company’s new factories as a competitive advantage, and new tax credits on electric vehicles looming in the US that could “accelerate demand” domestically. In China, some EV credits expire from the beginning of 2023. The company has a target price of $285 and a Buy rating on Tesla stock.
Vanderbilt University assistant professor Joshua White, who previously served as an economist for the US Securities and Exchange Commission, told CNBC, ″Only some of the drop in Tesla’s value can be blamed on interest rates. Accumulated twitter is an important component. China is another huge component. We still don’t know if China will be open all the way, and we see a pressure on supply and demand here given the increase in virus cases, and the disruptions.”
He also said Elon Musk may have lost shareholder confidence when he said in April that he had no plans to sell any more of his Tesla shares, but he went ahead and sold billions of dollars more.
“It seems like he’s selling stocks in really big blocks, saying ‘I’m done and I’m not selling anymore.’ other.”
On Wednesday, Musk responded to a tweet indicating that he wouldn’t “even consider the idea that his behavior affects the stock price.”
“Maybe it is, and in this case… a buying opportunity!” Musk responded on Twitter. “I keep saying the Fed rate is insane, because the data I’m seeing says we’re really in deflation. If that’s true, the real rate of return for Treasury bills is roughly the rate of the S&P500. He’s selling puts,” said the very smart investor I spoke to today. Shorting the S&P…”
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