Tesla stock closes lowest in years as investors worry about Musk’s focus

Tesla shares fell to their lowest in more than two years on Tuesday, marking the company’s worst day in eight months, as Elon Musk’s electric carmaker faces a rocky financial period.

The company’s share price has fallen by more than half since the beginning of October. Investors are concerned that Twitter is taking up too much of Musk’s time now that he is the owner and CEO of the social network.

His tenure as head of the platform has been marked by chaos as he implements – and often reverses – many new policies. Musk recently said finding a new CEO to replace him after a majority of polling Twitter users voted him to step down. Experts say his erratic behavior has undermined confidence in Tesla, with shares up 73% since November 2021.

Tuesday’s loss, which saw Tesla shares plunge 11.4%, also followed a Reuters report that the company was planning to run a reduced production program at its Shanghai plant in January. That news raised concerns about a slump in demand in the world’s biggest car market amid a rising number of COVID-19 infections in China.

“There’s no question of demand,” said Thomas Hayes, president of Great Hill Capital, citing a cut in delivery forecasts from Chinese rival NIO in the key market.

Hayes also said that Tesla’s stock was facing a “perfect storm” of higher interest rates, tax-loss sales and share sales by some funds that hold a significant amount of Tesla stock.

A tax-loss sale occurs when an investor sells an asset at a capital loss in order to reduce or eliminate capital gains realized by other investments for income tax purposes.

Meanwhile, a Reuters analysis showed that prices for used Tesla cars are falling faster than those of other carmakers, reducing demand for the company’s new vehicles rolling off the assembly line.

oysters first Held responsible Tesla’s recent struggles for a rate hike from the Federal Reserve have said “people will increasingly move their money from stocks to cash, which will drive stocks down”.

The billionaire himself unloaded Tesla stock this year, selling about $4 billion of his own shares in Tesla to finance the deal to buy Twitter, which he bought for $44 billion. He said in mid-December that he would not sell additional Tesla stock for “at least 18 to 24 months.” However, financial filings show he sold millions more in April 2022 after making similar promises.

Analysts have called for Musk to step down as executive at Tesla over his actions on Twitter, as he is already facing a lawsuit for alleged failure to focus on Tesla due to outside ventures.

Source link

Leave a Comment