Investors blame Elon Musk and wonder how much more the stock will fall.
New York Times
December 31, 2022 / 08:35 AM IST
Elon Musk Photographer: Christian Marquardt/Pool/Getty Images
In a down year for stocks, the 65% drop in Tesla’s share price stands out for the scale of wealth vaporized and the unorthodox behavior of its CEO, Elon Musk.
The collapse of Tesla’s stock price destroyed about $ 672 billion in market value. And Musk, once hailed as a genius who remade the car industry, appears increasingly distracted by his acquisition of Twitter and is using the social network to vent his frustrations. He insulted one of his critics this week by describing him as having “tiny testicles.”
The spectacle has stunned investors and analysts. And many are asking what will happen to the stock, the company and Musk in 2023. The answer largely depends on Musk and Tesla’s board of directors.
Will he return his attention to Tesla and its myriad challenges? Or will he remain camped out at Twitter? Will Musk sell more Tesla shares to keep Twitter going after spending $ 44 billion to buy that company, despite promising not to? Will the Cybertruck, Tesla’s first new passenger vehicle in three years, finally be available for sale? And perhaps most importantly, will Tesla’s board do anything to rein in Musk?
In a deteriorating economy, these uncertainties have forced investors to fundamentally reevaluate Tesla’s prospects. It remains the most valuable car company and the only major automaker regarded as a growth stock. But investors are no longer convinced that Tesla can dominate the auto industry the way that Apple dominates smartphones or Amazon rules online retailing.
“The promise of Tesla was that at some point, all of the cars in the world would be electric vehicles, and Tesla would play a major role in that,” said Efraim Benmelech, a professor of finance at the Kellogg School of Management at Northwestern University.
But, he added, investors have since reassessed that view and now seem to think that traditional carmakers like Ford and General Motors will be able to pose a credible competitive challenge to Tesla.
This week, there were signs that the share price was stabilizing. The shares rose to $ 123 Friday from a two-year low of $ 109 Wednesday.
This article originally appeared in The New York Times.
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