Tesla stock has fallen since CEO Elon Musk resumed Twitter, more than 45% drop in about two months.
In total, the company’s shares have fallen more than 65% since January, when Musk began investing in Twitter. By comparison, the tech-heavy Nasdaq fell about half in that time.
Musk said on Tuesday that he would resigned at the head of Twitter when the company identifies a successor. The news temporarily supported Tesla stock before it fell again.
The electric vehicle company is facing falling demand amid recession fears, growing competition and pandemic-induced production issues.
Additionally, some major analysts and investors sharply criticized Musk for his lack of focus on Tesla, saying the company needed leadership as it faced an unfavorable business environment.
“Musk is considered ‘asleep at the wheel’ from a Tesla leadership perspective at a time when investors need a CEO to weather this Category 5 storm,” said Dan Ives, a longtime Tesla bull. and Managing Director of Equity Research at Wedbush. a research note on Thursday.
“Instead, Musk is focusing on Twitter, which has been an ongoing, never-ending nightmare for investors, with the hope that a new CEO will be chosen in the coming weeks as a first step forward.” , added Ives.
Tesla did not immediately respond to a request for comment.
In addition to investor concerns about Musk, the company’s stock losses are due in part to insurgent rivals and falling demand.
Tesla remains the best-selling electric vehicle company in the United States, but its lead has slipped in recent months as competitors offer a host of affordable alternatives, a S&P Global Mobility report shown last month.
The company held 65% market share of new vehicles registered in the United States during the third quarter of this year, down from 71% last year and 79% in 2020, according to the report.
Responding to weakened demand, Tesla announced on Wednesday that it would offer $7,500 off Model 3 and Model Y vehicles delivered in the United States this month. Tesla shares fell almost 9% the next day.
Yet investor attention has focused on Musk and his apparent focus on Twitter.
The world’s richest person has sold nearly $40 billion worth of Tesla stock since the end of last year, including a $3.6 billion sale just last week as he financed the acquisition of Twitter.
The sales reduced Musk’s stake in Tesla, raising questions about his continued level of involvement in the company.
Some big Tesla investors have called on Musk to focus primarily on Tesla, which boasts a market capitalization of $392 billion, well above the value of Twitter, on which Musk spent $44 billion.
“I think it’s in the best interests of Tesla shareholders that Elon return to work full-time at Tesla,” said Ross Gerber, CEO of Gerber Kawasaki Wealth. & Investment Management, tweeted on Sunday.
For his part, Musk defended his actions on Twitter as part of an aggressive effort to save the company from financial peril, which he described in a Twitter Spaces interview on Tuesday as an “emergency exercise in case of fire”.
“That is the reason for my actions,” he added. “They can sometimes seem fake or weird or whatever.”
In an interview on Twitter Spaces on Thursday, Musk pledged to stop selling Tesla stock until at least 2024, although he has already breached his commitments to stop stock sales. He added, meanwhile, that he hadn’t missed “a single important Tesla meeting” since the Twitter acquisition.
Musk also said Thursday that he expects the economy to fall into a “severe recession” next year, further reducing demand for big-ticket items.
Certainly, this year has hit automakers across the industry. Ford shares fell 45% in 2022; while General Motors fell 43% and Toyota 26%.
Interest rate hikes at the Federal Reserve have pushed up borrowing costs, making car purchases more difficult for consumers already strained by soaring inflation. Meanwhile, pandemic-induced production bottlenecks and chip shortages have persisted, driving up costs and causing delivery delays.
In recent months, declining consumer confidence has put additional pressure on the industry.
Despite these headwinds, Tesla can stem its financial haemorrhage and turn around its business, said Ives of Wedbush Securities.
He attributed about 70% of Tesla’s share decline in recent months to Musk’s focus on Twitter, and urged Musk to return his focus to the company and stop selling Tesla stock.
“Step back, Tesla’s long-term transformation story remains intact,” Ives said, adding that he expects global demand for electric vehicles to accelerate significantly over the next few years. coming years.
Tesla, he said, is the “clear leader poised to benefit front and center.”
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