Investors are learning a painful lesson that Tesla’s stock price is valued on Elon Musk’s pomp and circumstance in addition to the automaker’s fundamentals.
“Is Tesla a big company that makes a big car? Absolutely. Is Tesla worth what General Motors or Ford or Toyota should be? Of course not,” veteran venture capitalist Bradley Tusk said on Yahoo Finance Live (video above). “Much of Tesla’s stock price is based on the hype and pixie dust that Elon Musk is so good at spinning around. When he threatens to puncture that image, it’s not only reflected on Twitter, but Tesla as well. SpaceX and everything else is doing.”
All eyes remain on what is happening to Tesla’s stock price during Musk’s tumultuous takeover of Twitter. And over the course of 2022, Musk unloaded an estimated $23 billion of Tesla stock despite him promising months ago not to sell any more.
Shares of the EV maker are down 20% so far this month, according to data from Yahoo Finance, and more than 55% so far in 2022.
Analysts point to several factors behind Tesla’s once-Teflon stock price plunge.
First, the risk of operational errors at Tesla has grown as Musk focuses on restructuring Twitter. Goldman Sachs recently took a more cautious stance on Tesla stock, saying Musk’s ownership of Twitter has become “polarizing” and a cloud on the stock.
Concerns also remain about Tesla’s manufacturing issues and pace of sales in China due to an uncertain approach to COVID-19 policies.
Finally, competition in the US EV industry has only intensified this year, raising the risk of a slowdown in Tesla’s growth in 2023 and beyond.
“It’s a brutal spiral that Musk has caused with fears he sells more stock by lobbying the name coupled with demand concerns,” Tesla observer Dan Ives told Yahoo Finance. “It’s a Ted Striker Airplane movie vibe right now with Musk and Tesla with all the attention from him seeming to be on Twitter for now.”
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and go LinkedIn.
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