Elon Musk’s electric car company is on the verge of having its worst month, quarter, and year on record, and it has surpassed Meta to become the worst-performing stock among the most valuable tech companies in 2022.
The sell-off in Tesla stock accelerated on Tuesday, with the stock closing down 11%.
The latest drop comes after The Wall Street Journal reported that Tesla will maintain a week-long production halt at its Shanghai facility due to a new wave of Covid cases among its Chinese workforce.
According to Reuters, when Tesla’s Shanghai plant reopens in January, it will do so for only 17 days, a departure from Tesla’s usual practices. This month, Shanghai has been hit by a new wave of Covid infections.
Tesla shares have dropped 73% since their all-time high in November 2021. In 2022, the stock is down 69%, more than doubling the drop in the Nasdaq. Ford is down 46% and General Motors is down 43% among major automakers. Tesla has only fallen once since its IPO in 2010, with an 11% drop in 2016.
Twitter is losing money, and Musk is selling large amounts of Tesla stock. According to filings from mid-December, Musk sold approximately 22 million more Tesla shares worth approximately $3.6 billion. Musk told his millions of social media followers earlier this year that he had “no further TSLA sales planned” after April 28.
Musk announced on Twitter Spaces on December 22 that he would not be selling any stock for the next 18 to 24 months. Musk blamed Tesla’s declining share price on Federal Reserve rate hikes in a debate with a Tesla shareholder, tweeting that: “people will increasingly move their money out of stocks into cash, thus causing stocks to drop.”
His words have had little effect on investors. According to FactSet, trading volume surpassed 201 million shares on Tuesday, the second-highest total for the year after December 22. Since December 13, Tesla’s top five trading days by volume have all occurred.
Tesla fell 44% in December, its worst month ever, as it had never fallen more than 25% in a single month before. And the stock is down 59% in the fourth quarter, worse than the 38% drop in the second quarter of this year, which was its worst period on record.
The used-car market is also under pressure, with the average price of a used Tesla dropping 17% from July highs, and used Teslas lingering longer than other makes before being resold.
Meanwhile, Musk has continued to flirt controversy at Twitter, allowing previously banned users to return, allowing the continued release of internal messages related to the company’s previous handling of Covid and election-related content, and flip-flopping on policy changes.
Companies on the platform have paused or suspended paid advertising, prompting Musk to lash out.
In a report released, Wedbush Securities’ Dan Ives stated that Musk’s leadership issues could lead to 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 shareholders want Musk to refocus his efforts on stabilizing the company that provides the vast majority of his wealth. According to Forbes, Musk relinquished his title as the world’s richest person earlier this month to LVMH chair and CEO Bernard Arnault due to the prolonged sell-off.
“I think he really needs to focus on operations, focus on giving us great cars,” said Craig Irwin, an analyst at Roth Capital who has a hold rating on the stock and an $85 price target.
Tesla closed at $109.10 on Tuesday. The stock was set to fall further Wednesday, with Tesla falling more than 3.5% in premarket trading in the United States.
