This has never happened in the Tesla community: Critics have criticized Elon Musk, the electric vehicle maker’s co-founder and CEO, seen as the architect of the electric revolution in Car industry.
And why doubt him? Musk has repeatedly helped Tesla, founded in 2003, avoid bankruptcy and most recently in 2018 and 2019. He has turned it into one of the largest companies by market capitalization. Tesla is one of the few companies in the world to reach the symbolic $1 trillion market value threshold, a feat achieved by 2021. Musk has promised that the $5 trillion threshold will be surpassed in Mid-term.
But the unthinkable happened and caused frustration that has now led to a mutiny in the Tesla-Musk universe.
Stocks Down 61%
Tesla’s stock has literally collapsed. It ended 2021 at $352.26 with a market cap of around $1.1 trillion. But it currently sits at $137.8 with a market cap of $435.1 billion. Essentially, in a year, the automaker’s stock has lost 61% of its value, while its market capitalization has dropped by nearly $680 billion.
For these shareholders, especially retail investors, the cause of Tesla’s stock drop this time is Musk. They made it public to him, which was unprecedented and unthinkable a few months ago.
One of the most vocal was Ross Gerber, who decided to run for the position of board of directors. He blames Musk for the Tesla stock market crash and has repeatedly criticized the tech king in recent days.
“Elon has now wiped $600 billion in tesla assets and still nothing from the Tesla board,” he criticized on December 16 on Twitter. “That’s completely unacceptable.” BOD stands for Board of Directors.
Gerber just reiterated this criticism and went further than demanding a change in the company’s head. Essentially, that Musk will be replaced as CEO.
“Tesla stock price now reflects the value of not having a CEO. Great job tesla board,” the investor said on Dec. 20. “Time for a change. $tsla.”
Musk was quick to respond.
“Tell us your great ideas, Ross…” quipped the billionaire.
“As I tweeted earlier… My three points,” replied Gerber. “1. Tesla needs a communications and communications team. 2. Tesla needs a succession plan as well as clarification on when Elon will return from twitter. 3. Tesla needs to announce the sale of Elon stock and should. make a truce deal. $ tsla”
The serial entrepreneur replied, “Go back and read your old Stock Analysis 101 textbook.”
Musk continued: “Simply put: When the interest rate on a bank savings account, which is guaranteed, begins to approach returns in the stock market, which is *not* guaranteed,” people will increasingly move money from stocks to cash, thus causing the stock to drop in price. .”
This explanation is the one Musk gave Gerber a few days ago. For him, it was an increase in the interest rate of Federal Reserve fight inflationary That was the main cause of Tesla’s stock market crash. The proof is that the stock market indexes are all down this year, due to fears of a recession.
As for one Twitter user, Musk said that perhaps his behavior has little effect on Tesla stock. If nothing else, it presents a buying opportunity for investors.
“The consolation is that Elon won’t even care about the idea that his behavior affects the stock price,” the Twitter user commented.
“Perhaps so, in that case… buying opportunity!” billionaire replied. “I keep saying the Fed rates are crazy, because the data I’m looking at shows we’re already in deflation. If true, then the real rate of return on Treasury bills is approximately equal to that of the S&P 500. The very smart investor I spoke to today said he was shorting the S&P…”
But for the billionaire’s critics, Tesla’s decline was due to his acquisition of Twitter. According to him, the billionaire decided to buy Twitter to turn the platform into a place of free speech. Since conducting a bid to acquire the social network on April 22, the tech mogul has only focused on Twitter.
He is ubiquitous across the platform, attacking enemies he is aware of and frequently creating controversy. The problem is that since the $44 billion bid for Twitter, Tesla’s stock has continued to fall. Musk finalized the deal on October 27, less than two months ago. Tesla shares have lost nearly 39% of their value in this short time.
Analysts also believe that the drop in the value of Tesla’s stock is largely due to Twitter. So when Musk announced on December 20 that he was stepping down as CEO of the platform, Dan Ives, an analyst at Wedbush, called it “good” news for Tesla.
“Musk announced he will step down as CEO once he finds a successor. Finally a step in the right direction to end this painful nightmare for Tesla investors,” Ives commented.