Tesla stock posted its worst week since the start of the pandemic in March 2020, losing $85 billion in market value in a reflection of investor skepticism about the electric carmaker’s prospects as CEO Elon Musk runs Twitter at the same time.
Shares in Tesla closed Friday at their lowest in more than two years, sending its market value below $400 billion. The stock has lost 18 percent this week.
Tesla was worth $1.2 trillion at the start of the year. The more than $800 billion drop in value equals the current combined market capitalization of more than 80 of the smallest companies in the S&P 500, according to S&P Global Market Intelligence. The automaker’s market capitalization this week fell below that of ExxonMobil, a company that relies on fueling internal combustion vehicles.
Downward pressure on Tesla stock has intensified in recent months due to Musk’s sell-off to fund his $44 billion acquisition of Twitter as well as growing concerns about its car sales outlook.
Tesla’s share price fell 9 percent on Thursday after the company said it would offer US consumers $7,500 in price discounts on two of its best-selling models, an announcement that sparked concerns about consumer demand.
Later that day, Musk promised via Twitter that he would not sell any more of his Tesla stake for at least a year. He also said he’s open to the idea of a buyback.
I’m not even going to sell the stock, I don’t know, maybe two years from now. Certainly not next year under any circumstances and probably not the next year.
Musk, who recently lost his status as the world’s richest man, has sold nearly $23 billion in stock since announcing his $44 billion acquisition of Twitter. Despite promising in April to stop doing so, he has subsequently sold the shares on three occasions, most recently last week. The disposals angered major investors, who felt the entrepreneur had abandoned the automaker to focus on his new purchase.
Musk promised to step down as CEO of the social media platform once he finds a replacement, after a poll of Twitter users on Sunday on the issue.
Dan Ives, a technical analyst with Wedbush Securities, lowered his price target Friday from $250 to $175 for the stock, but maintained an “outperform” rating. Tesla stock closed down 1.8 percent at $123.15 on Friday.
Ives tweeted: “We think if Musk puts the focus back on Tesla, really stops selling stock (going down the road, not just talking), the board starts buying back, and 2023 guidance is set that he’s conservative about.” [fourth-quarter] January call and then this stock bottomed out in our opinion and it works from here.”
Of the 41 Tesla analysts tracked by Refinitiv, four have “sell” ratings for the stock.
The drama surrounding Musk helped make Tesla the most profitable US company for short sellers this year, bringing in paper profits of just over $15 billion in 2022, according to S3, a New York-based professional advisory firm. Short sellers aim to profit from falling stock prices.
Since August, short sellers have increased their total short positions in Tesla by about a third to 81.8 million shares, or about 3 percent of the automaker’s outstanding shares, in a bet worth roughly $11.3 billion, S3 calculates.
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