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Will Tesla stock crash because Elon Musk is diverted from Twitter?

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Elon Musk for a picture of Tesla

Tesla is an electric car company. But in recent months it has also become something else: a touchstone for Elon Musk’s popularity among investors. As shareholders worried about Musk, Tesla’s CEO, being distracted by his high-profile, tumultuous takeover of Twitter, Tesla’s stock price began to reflect their unease. The board has expressed concern that they are spreading themselves too thin. Tesla shares lost as much as 58% of their value earlier this week, reaching their lowest point since early 2022.

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In the four weeks since October 27, when Musk actually took over Twitter, Tesla stock has fallen more than 18%. And that includes a modest rally in recent days, as analysts began to downgrade shares slightly – a sign they think the stock’s valuation is starting to decline.

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Musk has said he will hire someone to replace him as head of Twitter, but he didn’t say when. However, as the bumps in the chart above show, Musk’s Twitter game isn’t the only one the market is thinking about. Tesla shares fell in the first quarter and rose again before the Twitter deal was on the line. So what else drives it?

Not an easy time for electric cars

Over the past two years, all types of manufacturing have been hit hard, feeling the pressure to spend less in an uncertain environment due to tight raw material supplies, rising raw material prices and, in some cases, declining demand. Rising inflation The pressure on entrepreneurs has also increased.

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In March, Tesla raised the prices of some of its electric vehicles in the US and China, citing higher production costs, only to cut them again in China in October, sending the stock down almost 7%. Tesla has also had to go through several rounds of recalls this year, although the share price has fallen lower than expected as a result.

The kind of loss Tesla has suffered in the past two months totals $300 billion, according to Bloomberg, perhaps easier for the richest man in the world to digest. In August, Bloomberg reported that Musk’s vast personal wealth increasingly depends on his other company, SpaceX, which is privately held and therefore does not exhibit the same volatility as a company like Tesla. Musk may be leaning even more heavily on his space rockets now that loss-making Twitter is also dragging Tesla shares down.

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Source: finance.yahoo.com

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