Tesla’s profits on Wall Street drop to a third due to Elon Musk’s behavior
In 2022, Tesla lost nearly a third of its value in stocks, due to fears of demand for the electric car and repeated deals regarding Elon Musk and Twitter. And easy money on Wall Street.
However, the manufacturer increased its car deliveries by 45 percent in the first three quarters of the year, despite supply problems, and made a profit of nearly $9 billion in the period despite a significant increase in expenses.
However, these figures fell short of the long-term target of increasing deliveries by 50 percent annually.
Observers are also concerned about slowing sales.
In the last two years, demand has been higher than supply in the electric car market, but this trend is likely to reverse in 2023, according to Adam Jones, an analyst at Morgan Stanley.
“Between the deterioration in the macroeconomic environment, the prices that are out of reach for many, and the growth of competition, there are obstacles that need to be overcome,” Jones said.
Many traditional manufacturers now sell models of electric cars, including Ford, General Motors, Nissan, Hyundai, Kia and Volkswagen. In the category of luxury cars, several companies entered this line, namely Mercedes-Benz, BMW, Audi, Polestar, Lucid and Rivian.
Tesla still strongly dominates the US market with 65 percent of market shares during the first nine months of the year, but this percentage is lower than that recorded in 2020, which amounted to 79 percent, and local S&P Global expects decline to 20 percent in 2025.
To spur sales in the fourth quarter, the group announced unusual offers in the country.
The situation in China also seems worrying to the company. According to press information, the current suspension of production at the Tesla factory in Shanghai will last longer than expected.
However, many analysts point out that Tesla is still ahead on several tracks, including technology, cost management and production volume, in a market that is experiencing strong growth.
Bird considered, in a note published on Wednesday, that the group enjoys “the best position in the auto market,” recommending continuing to buy the company’s shares.
However, the Twitter spectrum, which Elon Musk completed its purchase two months ago for $ 44 billion, remains constantly present.
Wedbush analyst Dan Ives said in a note published Tuesday that Tesla needed “a leader who can lead it through the storm” rather than a “Twitter-focused” manager.
Stock market madness
The billionaire sold billions of dollars in shares from Tesla to finance the acquisition and then the operating costs of his new company, and he gave up shares worth $ 3.6 billion in early December, although he confirmed in the spring that there was no intention to sell more shares.
Musk brought the giant platform into strong turmoil, dismissing half of the employees and reactivating suspended accounts, including the account of former US President Donald Trump, and blocking accounts of journalists for no apparent reason.
Dan Ives said Musk had completely lost his credibility with the netizen community, speaking of unfulfilled promises to sell shares, Twitter’s failure and political controversies on the platform.
Also, the analyst at “Oppenheimer” Colin Rush considered that it was no longer “acceptable” to evaluate Tesla without taking into account the chaotic management on the part of Elon Musk. He expressed his fear that some buyers would move to a competing brand due to Musk’s strange stances on the platform.
The value of Tesla shares has also been hit by the general decline in stock markets this year.
In a Twitter conversation in mid-December, Elon Musk acknowledged that rising interest rates and the economic situation would likely slow demand for Tesla.
But Rush said, “I still expect Tesla to remain the most valuable company in the world over the long term.”
Musk called on Tesla employees, in a letter seen by CNBC on Wednesday, to “not care about the craziness of the stock market.”
The group’s shares rose by more than 700 percent in 2020, and then by 50 percent in 2021.
The stock has recovered nearly 12 percent over the past three days, but remained down 65 percent on Thursday evening compared to the beginning of the year.