Market Daily

Market Daily

Elon Musk addresses Tesla shares decline, cites other factors

Elon Musk says macroeconomic factors to blame for Tesla shares decline
Elon Musk says macroeconomic factors to blame for Tesla shares decline

Image source: CNBC

Elon Musk: Electric vehicle manufacturer Tesla saw its shares fall 8% on Tuesday, hitting a new 52-week low.

Elon Musk, the CEO, attributed the decline to macroeconomic factors.

The news

Tuesday’s market performance was mixed, as Tesla shares fell to a 52-week low, closing at about $138 per share, down 8%.

Elon Musk made an effort to assign blame to macroeconomic factors.

Ross Gerber, a longtime backer of Tesla, tweeted:

“Tesla stock price now reflects the value of having no CEO. Great job tesla BOD – time for a shake up. $tsla.”

Gerber launched an informal campaign to convince Tesla’s stockholders to support his election to the board of directors.

“As bank savings account interest rates, which are guaranteed, start to approach stock market returns, which are not guaranteed,” Musk replied.

“People will increasingly move their money out of stocks into cash, thus causing stocks to drop.”


Since Musk stated earlier this year that he would be buying Twitter, Tesla’s stock has fallen more than those of other well-known manufacturers.

Tesla shares are down 59% since April compared to 26% and 12% falls at Ford and GM, respectively.

Meanwhile, the S&P 500 is down 14%.


Elon Musk, according to Ross Gerber, has repeatedly been distracted.

He made mention of the issues the powerful social media platform Twitter’s new CEO and owner had been creating.

Late in October, Musk used a leveraged buyout to acquire Twitter.

Additionally, he splits his time overseeing a big defense contractor and acting as CEO of SpaceX.

Read also: Elon Musk recently sold a portion of Tesla’s shares

Twitter acquisition

Elon Musk sold his Tesla holdings for billions of dollars, including a $3.6 billion transaction earlier in December, to pay for the purchase of Twitter.

In an effort to “save” the business, he cut more than half of the workers last month after selling his Tesla for billions of shares.

Then he made a number of adjustments to both products and policies, which he later reversed.

Musk called an all-hands meeting in November following layoffs to motivate the remaining Twitter employees.

He sold Tesla stock, estimated to be worth $3.95 billion, at the start of November.

He sold 19.5 million more Tesla shares, according to a filing with the Securities and Exchange Commission.

In April, Musk sold Tesla shares worth over $8 billion, and in August, he sold stock worth over $7 billion.

On Twitter, the Tesla CEO and other companies he co-founded solicited autopilot engineers, friends, backers, and deputies to join the team.

Tesla’s challenges

Since late October, Elon Musk has been focusing on his “Chief Twit” role.

Tesla has been offering discounts and incentives to sell automobiles in China, where the company has a sizable manufacturing base in Shanghai.

The company has also battled to raise the productivity of recently built facilities in Austin, Texas, and Brandenburg, Germany.

In addition, Tesla continues to have supply chain problems in the auto industry despite Europe’s increasing energy prices.

The situation in Europe may reduce drivers’ interest in electric vehicles.

Price targets

Due to the issues, the firm is now dealing with, Mizuho Securities and Evercore ISI reduced their Tesla price expectations on Tuesday.

Analysts at Mizuho Securities warned of “potential weakness in Tesla sales as macro headwinds and a weaker consumer could drive lower demand for higher-priced EVs.”

The company is nevertheless enthusiastic about Tesla in the long run and cites the following factors as possible sources of rising domestic demand:

  • New Tesla factories could provide a competitive advantage
  • New electric vehicle tax credits in the United States

Early in 2023, China’s EV credits start to run out.

As a result, the organization has a buy rating and a $285 price goal on Tesla’s stock.

Read also: Twitter Blue charged $3 extra for iPhone users

Tesla shares

Joshua White, an assistant professor at Vanderbilt University and a former economist for the US Securities and Exchange Commission, said:

“Only some of the drop in Tesla’s value can be blamed on interest rates. Twitter overhanging is one important component. China is another huge component.”

“We still don’t know if China will be open all the way, and we see there is supply and demand pressure here in light of the increase in Covid cases and disruption.”

According to White, Elon Musk undoubtedly lost the confidence of shareholders in April when he said he didn’t sell any extra Tesla shares.

Musk persisted, however, and made billion-dollar sales of more shares.

“He seems to sell equity in really large blocks, say ‘I’m done and I’m not selling anymore.’ But talk is cheap,” continued White.

“He says that and then sells more shares. So the more you say that and investors think he’s probably not done? The less confident they will be that the price is going to bounce back.”


Elon Musk tries to explain why Tesla shares are tanking

Elon Musk tells Twitter staff he sold Tesla stock to save the social network

Opinions expressed by Market Daily contributors are their own.