Tesla Stock Marks Lowest Close In Years As Investors Worry About Musk’s Focus – Elon Musk’s electric car maker is facing a turbulent financial moment, as Tesla shares plunged to their lowest level in more than two years and their worst day in eight months. Since the beginning of October, the company’s stock has lost more than half of its value. Investors are concerned that Musk’s time is being consumed by Twitter now that he is the owner and CEO of the social network. His tenure as leader of the platform has been characterized by chaos as he implements and frequently reverses a multitude of new policies.
Musk has stated that he will hire a new CEO to replace him after the majority of Twitter users polled voted for his resignation. According to experts, his erratic behavior has weakened confidence in Tesla, as the company’s stock has fallen 73% since November 2021. Tuesday’s 11.4% decline in Tesla shares followed a Reuters story that the company planned to run a reduced production schedule at its Shanghai facility in January. A rising number of Covid-19 infections in China raised fears of a decline in demand for automobiles in the world’s largest auto sector.
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“There’s no question there are demand fears,” Great Hill Capital chairman Thomas Hayes said, citing a delivery forecast cut from Chinese rival Nio in the key market. Hayes also added that Tesla’s stock was facing a “perfect storm” of high interest rates, tax-loss selling and share sales by some funds that hold a significant amount of Tesla stock. Tax-loss selling is when an investor sells an asset at a capital loss to lower or eliminate the capital gain realized by other investments for income tax purposes.
Meanwhile, a Reuters analysis showed that prices of used Tesla cars were falling faster than those of other carmakers, weighing on demand for the company’s new vehicles rolling off the assembly line. Musk previously attributed Tesla’s recent struggles to rate hikes from the Federal Reserve, stating “people will increasingly move their money out of stocks into cash, thus causing stocks to drop.”
The billionaire himself has sold Tesla stock this year, selling approximately $4 billion worth of Tesla shares to finance his $44 billion acquisition of Twitter. Mid-December, he stated that he would not sell any Tesla shares for “at least 18 to 24 months.” However, according to his financial reports, he sold millions of dollars after making similar claims in April 2022. Analysts have raised the prospect that Musk will be asked to resign from his executive position at Tesla owing to his conduct on Twitter, given that he is already facing a lawsuit for allegedly failing to focus on Tesla due to his involvement in other ventures.
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