Tesla shares have fallen over the past year, in part because investors worry that CEO Elon Musk is too distracted with the Twitter takeover.
Jim Watson/AFP via Getty Images
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Jim Watson/AFP via Getty Images
Tesla shares have fallen over the past year, in part because investors worry that CEO Elon Musk is too distracted with the Twitter takeover.
Jim Watson/AFP via Getty Images
For several years, the rapid rise of Tesla stock attracted, thrilled, and bewildered Wall Street. But in 2022, that meteorite died out.
The electric carmaker’s stock has lost 65% of its value in 2022. And the company kicked off the year with another plunge, falling 12% in just one day after disappointing sales numbers. expected to be published.
That’s not just bad for investors. It also doesn’t bode well for Tesla CEO Elon Musk, who has a large portion of his fortune tied to the automaker and is no longer the richest person in the world.
But what made those sales numbers so disappointing? Tesla sets new sales record; it has increased the number of deliveries by 40%. The company continues to dominate the electric vehicle market in the US, a market that is growing rapidly as the world seeks to reduce climate change carbon emissions.
Here are four reasons the convertible company’s stock has fallen in price.
It’s been a tough year for the entire auto industry
It’s not just Tesla that has seen stock values slide. The stock market as a whole has been in decline in 2022, and in the auto sector, every automaker has seen stock prices go down. Big players like General Motors and Ford are down about 40%, and startups like Rivian and Lucid are down more than 80%.
Automakers all face the same headwinds as the broader economy (inflation, rising interest rates).
They also started 2022 with a shortage of parts keep a lot of unusually empty dealers — and end the year with sky high car prices that can turn potential buyers away.
U.S. auto sales fell in 2022 to their lowest level in a decade, according to estimates from Cox Automotive.
And Tesla’s sales may have grown 40% from 2021, but they’ve still fallen short of both its ambitious growth target and analysts’ expectations.
Tesla faces new competition in electric vehicle sales
Despite a tough year for the auto industry as a whole, electric vehicle sales picked up last year. And Tesla continues to dominate the electric vehicle market.
Bad news for Tesla? Competition is increasing. In the high-end segment of the market, familiar names like Mercedes-Benz, BMW and Audi, as well as Lucid, Rivian and Polestar, are starting to squeeze into the territory of Tesla’s more expensive models.
“We have a lot of cars that are on par with Tesla in that they’re performance-driven, they’re luxury,” said Brian Moody, executive editor of Autotrader.
Brand new Tesla cars sit in a parking lot at the Tesla factory in Fremont, Calif., in October. Tesla stock has lost 65% of its value by 2022.
Photos Justin Sullivan/Getty
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Photos Justin Sullivan/Getty
Brand new Tesla cars sit in a parking lot at the Tesla factory in Fremont, Calif., in October. Tesla stock has lost 65% of its value by 2022.
Photos Justin Sullivan/Getty
Meanwhile, vehicles like the redesigned Kia EV6, Ford Mach-E and Chevy Bolt are beginning to dominate the mass electric vehicle market. There is also growing competition in China, a key market for Tesla and other automakers.
Tesla still accounts for 65% of US electric vehicle sales, according to S&P Global Mobility. But the percentage is falling, which the stock market doesn’t like.
Elon Musk’s Twitter acquisition gives Tesla a headache
Musk has run many companies over the years. But his purchase of Twitter last year doesn’t look like he manages SpaceX, for example.
The aura around Musk – to his fans, a genius and a visionary – is part of the reason so many people want a Tesla. Now, Musk has essentially become a professional troll on Twitter, posting provocations and gleefully embracing some right-wing positions from his position of power atop the social media giant. festival.
One Morning Consult’s survey found that from October to November 2022, net preference for Tesla fell 20 percentage points for Democrats and increased by 4 points for Republicans. That could hurt sales, as liberal voters are more likely to want to buy electric cars.
Musk also had to sell billions of dollars in Tesla stock to fund his Twitter takeover, which hurt the stock. Musk sees his personal wealth plummet, though he still has more than $100 billion.
Meanwhile, to the chagrin of some of his most ardent supporters, the amount of time he spends on Twitter is cutting down on the time Musk spends with Tesla.
Many Tesla investors are agitating for Musk to appoint a new CEO of Twitter, like he declared he wouldand withdrew from the social media company.
Analyst Daniel Ives, a longtime Tesla fan who has criticized Musk’s handling of the sale on Twitter, wrote: “This is a moment of truth for Musk to navigate damage control.
Turns out Tesla is an auto company
Another possible explanation for why Tesla stock has fallen so sharply: It is simply overvalued to begin with and it is currently trading at a more realistic level.
For a short period of time, Tesla traded more like a high-flying tech stock than a commodity producer.
Musk himself has encouraged that, calling Tesla a “software company.” The word “stratospheric” was used a lot when stock prices were so high that it couldn’t be justified based on Tesla’s revenue or production figures.
Now prices have fallen back closer to earth, for Tesla as well as similar tech companies on Wall Street.
So as a stock, Tesla had a bad year. But in reality, as a company that makes cars — the stuff people buy and drive around — Tesla sold 1.3 million units in 2022.
That’s impressive, especially given the supply chain struggles with the entire industry.
Looking ahead, even with more competition, Tesla has plenty of room to continue to grow.
Stephanie Brinley of S&P Global Mobility predicts: “Their volume will still grow and they will still make money.
And Notable: Even After Losing $700 Billion in Value, Tesla Still stand still The most valuable car manufacturer in the world.
