Tesla stock marks lowest close in years as investors worry about Musk’s focus

Experts blame Elon Musk’s management style at Twitter for the electric carmaker’s financial problems

Tesla shares fell on Tuesday to their lowest in more than two years, marking the company’s worst day in eight months, as Elon Musk’s electric carmaker confronts a rocky financial period.

The company’s stock has lost more than half its value since the start of October. Investors worry that Twitter is taking much of Musk’s time, now that he is the social network’s owner and CEO.

His tenure as head of the platform has been marked by chaos as he implements – and often reverses – a host of new policies. Musk recently said he would find a new CEO to replace him after most polled Twitter users voted for him to step down. Experts say his erratic behavior has undermined confidence in Tesla, with shares down 73% from November 2021.

Tuesday’s loss, which saw Tesla shares drop 11.4%, also followed a Reuters report that the company was planning to run a reduced production schedule in January at its Shanghai plant. That news sparked worries of a drop in demand in the world’s biggest car market, amid a rising number of Covid-19 infections in China.

“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 offloaded Tesla stock this year, selling nearly $4bn of his own shares in Tesla to finance the deal to buy Twitter, which he bought at $44bn. He said in mid-December he would not sell additional Tesla stock “for at least 18 to 24 months”. However, financial filings show he sold millions after making similar promises in April 2022.

Analysts have raised the possibility of Musk being asked to step down as executive at Tesla over his actions at Twitter, as he is already facing a lawsuit over his alleged failure to focus on Tesla due to outside ventures.


Kari Paul and agencies

The GuardianTramp

Related Content

Article image
Concern over Elon Musk’s Twitter takeover wipes $126bn off Tesla value
Fears that carmaker’s CEO may have to sell shares to fund $44bn acquisition of social network

Guardian staff and agency

27, Apr, 2022 @7:02 AM

Article image
Tesla under investigation by SEC after fatal crash involving autopilot, report says
The SEC is scrutinizing whether Tesla should have disclosed the self-driving car crash in a formal regulatory filing, according to the Wall Street Journal

Jemima Kiss in San Francisco

11, Jul, 2016 @10:19 PM

Article image
Improved Tesla Model S among world's fastest-accelerating cars, company says
Company announces new versions of electric car models S and X P100D with extended battery range – though Elon Musk admits: ‘It is a very expensive car’

Olivia Solon in San Francisco

23, Aug, 2016 @8:44 PM

Article image
Tesla investors demand Elon Musk apologize for calling Thailand diver 'pedo'
Tesla CEO called immature after attacking Vernon Unsworth, who rescued trapped children

Sam Levin in San Francisco

17, Jul, 2018 @7:12 PM

Article image
Tesla trial: did Musk’s tweet affect the firm’s stock price? Experts weigh in
Legal and finance experts say the car company’s attorneys face an ‘uphill battle’ to prove the billionaire’s tweets had no impact on shares

Erin McCormick in San Francisco

29, Jan, 2023 @6:00 AM

Article image
Tesla gets restraining order against alleged harasser
Carmaker says man trespassed on factory in California and drove at security guard

Jasper Jolly

21, Apr, 2019 @1:08 PM

Article image
Model Y: Tesla unveils new electric crossover SUV
Company is banking on the new model to revive excitement about the brand as traditional carmakers expand their electric vehicle offerings

Julia Carrie Wong and agencies

14, Mar, 2019 @7:01 PM

Article image
Tesla shares fall despite electric carmaker's first annual profit
Bumper payout to CEO Elon Musk and move towards making cheaper EV models means earnings failed to meet forecasts

Jasper Jolly

28, Jan, 2021 @9:30 AM

Article image
Tesla driver dies in first fatal crash while using autopilot mode
The autopilot sensors on the Model S failed to distinguish a white tractor-trailer crossing the highway against a bright sky

Danny Yadron and Dan Tynan in San Francisco

30, Jun, 2016 @11:14 PM

Article image
Tesla fatal crash: 'autopilot' mode sped up car before driver killed, report finds
Findings about crash in Silicon Valley raise fresh concerns about limits of Elon Musk’s technology

Sam Levin in San Francisco

07, Jun, 2018 @11:19 PM