Massive fall in Tesla shares: Musk talks about ‘market craziness”

The massive fall in Tesla shares forced Elon Musk on Wednesday to tell employees not be “too bothered by stock market craziness”, a clear sign that he himself is focused on the losses.

On Tuesday, Tesla’s sell-off had intensified, with the stock closing down 11 percent. It means Musk’s electric car company is days away from closing out its worst month, quarter and year on record and has moved past Meta to become the worst-performing stock in 2022 among the most valuable tech companies.

However, there was a slight improvement on Wednesday as the share price increased from $110.83 to $112.71.

In December, Tesla has plunged 44 percent, by far its worst month ever, as it had never fallen more than 25 percent in a single month. And in the fourth quarter, the stock is down 59 percent worse than its 38 percent drop in the second quarter of this year, which had been its worst period on record.

Musk circulated the comments on Wednesday in a companywide email, telling the staffers that Tesla needs to “demonstrate continued excellent performance,” and that “long-term, I believe very much that Tesla will be the most valuable company on Earth!”

Tesla shares have declined about 68 percent for the year, though they rose 3.3 percent on Wednesday to $112.71. The stock is down 42 percent in December, and is poised to close out its worst month, quarter and year on record.

Musk has blamed Tesla’s declining share price in part on rising interest rates. But critics point to his Twitter takeover as a bigger culprit for the slide, which has wiped out about $675 billion in market cap this year as of Wednesday’s close.

In the email, Musk thanked Tesla employees for their work in 2022, encouraged them to push hard for a strong fourth-quarter finish, and asked them to “volunteer to help deliver” cars to customers before midnight on Dec. 31, if at all possible.

During the last days of most quarters, Tesla enlists employees from all over the company to bring new cars to customers in order to hit or exceed stated delivery goals, work that in normal times is limited to people on the sales and delivery teams. The company has been aiming for 50 percent year-over-year growth in vehicle deliveries but has cautioned investors it may not meet that target every year.

Musk’s attention has been focused on Twitter of late. The Tesla and SpaceX CEO sold tens of billions of dollars worth of shares in his electric vehicle company in 2022 to finance the $44 billion buyout of the social media company.

Is it ‘Tesla Winter’?

The drop in share price on Tuesday came after The Wall Street Journal reported that Tesla will continue a weeklong production halt at its Shanghai facility, facing a fresh onslaught of Covid cases within its Chinese workforce.

It was also reported that when Tesla’s Shanghai plant reopens in January, it will do so for just 17 days, in a break from Tesla’s established practices. Shanghai has been battered by a fresh wave of Covid infections this month.

Tesla shares have fallen 73 percent from their record high in November 2021. The stock is down 69 percent in 2022, more than double the decline in the Nasdaq. Among major carmakers, Ford  is down 46 percent and General Motors has fallen 43 percent. Since its IPO in 2010, Tesla has only fallen in one other year, an 11 percent drop in 2016.

Twitter is bleeding cash, and Musk is selling Tesla stock in big chunks. According to filings in mid-December, Musk sold about 22 million more shares of Tesla, which were worth around $3.6 billion, Earlier this year, Musk told his millions of followers on social media that he had “no further TSLA sales planned” after April 28.

After his latest stock sale, Musk said on Twitter Spaces on Dec. 22 that he would not be selling any stock for 18 to 24 months. In a debate with a Tesla shareholder, Musk pinned Tesla’s declining share price on Federal Reserve rate hikes, tweeting that “people will increasingly move their money out of stocks into cash, thus causing stocks to drop.”

Last week, Tesla expanded discounts in North America for buyers of Model 3 and Model Y electric vehicles. Those discounts came after the automaker offered incentives in mainland China for December auto sales earlier this month.

Pressure is also mounting in the used-car market, with the average price for a used Tesla dropping 17% from July highs, and with used Teslas lingering longer than other makes before being resold.

Meanwhile, Musk has continued to flirt with controversy at Twitter, welcoming back previously banned users, enabling the continued releases of internal messages related to the company’s past handling of Covid and election-related content, and flip-flopping on policy changes.

Companies have paused or suspended paid advertising on the platform, prompting outbursts from Musk.

Wedbush Securities’ Dan Ives wrote in a report on Tuesday that Musk’s leadership issues posed potentially deeper problems for the automaker.

“At the same time that Tesla is cutting prices and inventory is starting to build globally in face of a likely global recession, Musk is viewed as ‘asleep at the wheel’ from a leadership perspective,” wrote Ives, who maintained his buy recommendation on the stock.

Tesla investors want Musk to refocus his efforts on stabilizing the company that accounts for the vast majority of his wealth. Because of the extended sell-off, Musk ceded his title as the world’s richest person earlier this month to LVMH chair and CEO Bernard Arnault, according to Forbes.

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