Elon Musk tries to explain why Tesla stock is crashing

Stocks of electric car manufacturers Tesla It hit a 52-week low on Tuesday and closed at about $138 per share.

CEO Elon Musk has tried to attribute some of the price declines to macroeconomic factors.

Longtime Tesla Bull Ross Gerber wrote in a tweet“Tesla’s stock price now reflects the value of not having a CEO. Tesla’s BOD is doing a great job – it’s time for a change. $tsla.” He had fellow shareholders vote to appoint him to Tesla’s board of directors.

Musk replied: in a tweet“As interest rates on insured bank savings accounts begin to approach uninsured stock market returns, people will increasingly move their money from stocks to cash, and stocks will fall as a result. .

Elon Musk speaks at a press conference at SpaceX’s Starbase facility near Boca Chica Village in South Texas on February 10, 2022.

Jim Watson | AFP | Getty Images

But since Musk announced plans to buy Twitter in April 2022, Tesla’s share price has fallen more than any other major automaker. ford 12% GMThe S&P 500 is down 14%.

As Gerber points out, the Tesla CEO has plenty of distractions. Defense Contractor, SpaceX.

Musk funded Twitter’s deal by selling billions of dollars of his Tesla stake, including a $3.6 billion sale earlier this month.

He told a Twitter employee he sold his Tesla shares to “save” their business It cut more than half of the company’s staff and rolled out a number of product and policy changes, some of which were later reversed.

Musk has been focusing on his new role as “Chief Twit” since the end of October, while Tesla offers discounts and incentives to sell cars in China, where it operates a major factory in Shanghai. doing. He is fighting to make new factories in Austin, Texas and Brandenburg, Germany more efficient. The auto industry also faces unique challenges in sustaining supply he chain, as well as high energy prices in Europe that could make battery electric vehicles less attractive to many drivers.

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These are, among other challenges, the relationship between Mizuho Securities and Evercore ISI Lowering Tesla’s price target on Tuesday.

Analysts at Mizuho Securities wrote in a note: “In the short term, Tesla’s sales could weaken as macro headwinds and sluggish consumer sentiment could dampen demand for more expensive EVs. I think,” he wrote. The company remains bullish on the long term, citing its new factory as a competitive advantage and a new electric vehicle tax credit in the US that could “accelerate demand” domestically. , some EV credits will expire in early 2023. The company has a price target of $285 and a buy rating for Tesla stock.

Vanderbilt University assistant professor Joshua White, who previously worked as an economist for the U.S. Securities and Exchange Commission, told CNBC: Only part of Tesla’s decline in value can be blamed on interest rates. Overhangs on Twitter are one of the key elements. China is another big component. Whether or not China will fully open up remains to be seen, but we believe there will be supply and demand pressures here in light of the rising number and disruptions of COVID-19. “

He also said Elon Musk may have lost shareholder confidence when he said in April that he wouldn’t sell any more Tesla shares, but sold billions more.

“He seems to be selling stock in very large blocks and says, ‘I’m done and I’m not going to sell any more.’ So the more you say that, the more investors will probably think he’s not done – they’ll lose confidence that the price will bounce back.

https://www.cnbc.com/2022/12/20/elon-musk-tries-to-explain-why-tesla-shares-are-tanking.html Elon Musk tries to explain why Tesla stock is crashing

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