Elon Musk has been having a tough closing to the year after the Twitter acquisition and that has carried over to Tesla. The shares of this electric car manufacturer closed December with a drop due to multiple situations. Investors are mainly focused on Musk and his actions at the head of the social network of the little bird. Last Tuesday, shares of the electric car company fell to their lowest level in two years. For the South African billionaire, these are the worst days in several months and, in addition, he is facing a complicated financial period.
Since October, Tesla shares have been losing their value. To the point of being below value at the beginning of this debacle. Investors and pundits have been concerned about how Twitter is taking time away from Elon Musk. Being owner and CEO of the social network keeps him busy at it full time. In addition to this, his mandate has been in chaos with every measure he implements.
This is in addition to the constant new policies it is seeking to reverse the criticism of its actions on Twitter. Musk had announced the hiring of a CEO to replace him at the social network. Especially after a good number of surveyed users voted for his resignation. Experts understand that this erratic behavior has undermined their confidence with Tesla investors. Shares of the electric car maker have fallen 73 percent, since November 2021.
A steady decline for Tesla
The electric car manufacturer’s shares fell by 11.4 percent last Tuesday. This was compounded by a Reuters report of a reduced production schedule in January at the Shanghai plant. Here there were a number of concerns regarding the drop in demand for electric vehicles worldwide. This comes on top of an exponential growth in the number of covid-19 infected in China, coming three years after the first reported case at the end of 2019.
“There is no question that there are demand fears,” said Thomas Hayes, president of Great Hill Capital. In addition, he made a mention of the cut in the delivery forecast of Chinese rival Nio. For Hayes, these situations are key to understanding the reality of the electric vehicle market. Hayes also understands that Tesla’s stock is inside a “perfect storm.” This is the result of high interest rates, tax loss carryforwards and sales of shares by some funds that own significant amounts of the company’s shares.
Towards a 2023 complex
The analysis presented by Reuters made it clear that Tesla’s car prices have been falling faster than those of other manufacturers. This situation weighs mainly on the demand for the company’s new vehicles coming off the assembly line. For the South African billionaire, what is happening in the company is a product of the Federal Reserve’s rate hikes. “People will increasingly move their money out of cash stocks, which will cause stocks to fall,” Musk sentenced.