Between new rivals and a distracted boss, Tesla struggles on Wall Street

Tesla has lost a staggering two-thirds of its market value by 2022, victimized by fear of demand for electric vehicles, frustrated by Elon Musk’s difficulties as head Twitter and the end of easy money on Wall Street.

On paper, things are going well for the iconic electric vehicle maker that weathered supply problems and made nearly $9 billion in profit in the first three quarters of the year despite rising costs. High.

But this is slower than the frenetic growth that CEO Musk demands of his company with ambitions that have declared that Tesla will dethrone Apple as the world’s most valuable company.

Even if stock prices depend on “a lot of emotional factors… my best guess is that Tesla will be the most valuable company in the world in less than five years,” one The defiant Musk told a Twitter forum this month.

Blaming problems on “macroeconomic conditions” and high interest rates, Musk said he “can’t say enough good things” about Tesla, asking listeners to ignore his misdeeds. on Twitter, where the fickle CEO has been in the spotlight since taking over in October.

But for some analysts, the problems at Tesla are more serious and unrelated to Twitter — largely because the days when it was the sole player in the electric vehicle market are over.

The New Year “The electric vehicle market is shaping up to be a ‘reset’ year,” with supply flooding the market, said Morgan Stanley analyst Adam Jonas.

“There are hurdles to overcome,” adds Jonas—with increasing competition and a deteriorating economy, with the cost of living soaring due to inflation.

Rare discount

In 2023, the buzz of EV engines will come from vehicles other than Teslas as traditional automakers roll out models at unprecedented speeds.

In Tesla’s luxury car category, Mercedes-Benz, BMW, Audi, Polestar and Rivian have joined the fray, and change is happening rapidly for Tesla.

While Musk’s Texas-based company still had a 65% market share in the first nine months of the year, S&P Global analysts predict Tesla’s market share will drop to just 20% by 2025.

The situation in China is also not helping: according to press reports, production is currently suspended at Tesla’s Shanghai factory due to Covid-related problems.

To boost sales, Tesla offered a $7,500 discount to US customers on the new Model 3 or Model Y, along with 10,000 miles of free fast charging.

Twitter “storm”

Tesla, thanks in part to its superstar CEO, still has raving fans, and Tesla is still seen as undisputed for technology, cost management, and scale in a rapidly growing market.

Investment firm Robert W. Baird believes the group has “the best position in the auto market” and still recommends buying Tesla stock despite the collapse.

Looming over everything is the shadow of Twitter, the influencer social network acquired in October by Musk – who has fired more than half of his employees, controversially.

Tesla needs “a CEO to navigate this Category 5 storm” not a “Twitter-focused” boss, Wedbush’s Dan Ives said in a note published Tuesday.

The billionaire has sold several billion dollars of Tesla stock to fund his new venture and has sold billions more since buying back $44 billion — in violation of his pledge to stop selling shares.

He also provoked critics by inviting Donald Trump and hundreds of other banned users back to Twitter and suspending several journalists in an apparent rage.

Colin Rusch, of Oppenheimer, said decoupling Tesla’s future from Musk’s erratic management of Twitter has become “unresolvable”.

Rusch said the events on Twitter were “too much for the majority of consumers to continue to support Musk and Tesla”, and predicted the billionaire’s antics will turn at least some buyers towards options. choose another electric vehicle — no controversy.

The stock crash occurred after Tesla shares surged more than 700% in 2020 and 50% in 2021.

They have recovered by almost 12% over the past two days, but are still down 65% on Thursday night from the start of the year.

© 2022 AFP