Musk blames macroeconomics factors as Tesla share price falls 8%

Elon Musk is now busy in blaming the macroeconomic factors as shares in Tesla sank to a new 52-week low on Tuesday, closing around $138 per share which was 8 percent lower for the day.

In an attempt to divert attention from his antics and policies, especially those related to the Twitter, the Tesla CEO used Twitter to convey his thoughts.

The latest decline in Tesla share prices comes a day after the Oppenheimer & Co downgraded its rating.

“Tesla stock price now reflects the value of having no CEO,” Long-time Tesla bull Ross Gerber wrote in a tweet. He mocked the Tesla Board of Directors called for a shakeup, which triggered a reply from Musk.

Gerber has launched an informal campaign to have fellow shareholders vote to appoint him to Tesla’s board of directors.

In his response, Musk said, “As bank savings account interest rates, which are guaranteed, start to approach stock market returns, which are not guaranteed, people will increasingly move their money out of stocks into cash, thus causing stocks to drop.”

But Tesla’s stock has dropped more than other larger automakers since Musk announced his plans to buy Twitter in Apr 2022. Since that date, Tesla shares are down 59 percent against 26 percent for Ford and 12 percent for GM.

Meanwhile, the Tesla chief has a lot of distractions, as Gerber notes: Musk has been stirring controversy as the new owner and CEO of Twitter, the social media giant which he acquired in a leveraged buyout in late October, and is also the CEO of a major defense contractor, SpaceX.

Musk sold billions of dollars of his Tesla holdings to finance the Twitter deal, including a $3.6 billion sale earlier this month.

He told Twitter employees he sold Tesla shares to “save” their business while proceeding to cut more than half of staff at the company and rolling out a host of product and policy changes, some of which he later reversed.

While Musk has been focused on his new role as “Chief Twit” since late October, Tesla has been offering discounts and incentives to sell cars in China, where it operates a major factory in Shanghai; fighting to make its new factories in Austin, Texas, and Brandenburg, Germany, efficient; and facing persistent supply chain challenges endemic to the auto industry, along with soaring energy prices in Europe which may reduce the appeal of a battery electric vehicle for many drivers.

Those, among other challenges, led Mizuho Securities and Evercore ISI to reduce their Tesla price targets on Tuesday.

Mizuho Securities analysts wrote in a note, that “near-term, we see potential weakness in Tesla sales as macro headwinds and a weaker consumer could drive lower demand for higher-priced EVs.”

Tesla downgraded

The share price slump comes a day after Oppenheimer & Co downgraded its rating on Tesla, citing risks posed by the billionaire’s ownership and management of Twitter.

It is related to Musk’s management of Twitter, including the banning of multiple journalists, has “severely damaged” market sentiment around Tesla, and risks sparking a backlash from advertisers and consumers.

According to Oppenheimer & Co analyst Colin Rusch, Musk – Tesla CEO – is increasingly isolated as the steward of Twitter’s finances with his user management on the platform. “We see potential for a negative feedback loop from departure of Twitter advertisers and users,” he wrote to clients.

He also say that an exodus of advertisers will only further erode Twitter’s finances and force Musk to unload even more Tesla stock to cover the cash hole.

Reduced share in market

Last month, it was projected that the Tesla share in the US market share will have be less than 20 percent by 2025 with the introduction of cheaper models by the rivals.

Moreover, the number of EV (electric vehicle) models currently stands at 48 but it would be 159 by 2025.

According to report a prepared by S&P Global Mobility, Tesla’s share of new registered electric vehicles in the US stood at 65 percent in the third quarter, representing down from 71 percent last year and 79 percent in 2020.

It said Tesla no more enjoys a monopoly as fully electric models with equal or better technology are now available in a price range below $50,000. Its entry-level Model 3 starts at about $48,200 with shipping fees, but the vehicles typically retail for higher prices with options.

“Given that consumer choice and consumer interest in EVs are growing, Tesla’s ability to retain a dominant market share will be challenged going forward,” the report says.


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