Tesla shares fell to their lowest level in more than two years on Tuesday, marking the company’s worst day in eight months, as Elon Musk’s electric carmaker faces a difficult financial period.
The company’s shares have lost more than half their value since early October. Investors fear that Twitter It’s taking up a lot of Musk’s time now that he’s the owner and CEO of the social network.
His tenure as head of the platform has been marked by chaos as he implements, and often reverses, a series of new policies. Musk recently said that he would find a new CEO to replace him after the majority Twitter users surveyed voted for his resignation. Experts say his erratic behavior has undermined confidence in Tesla, with shares falling 73% since November 2021.
The defeat on Tuesday, which saw tesla shares fall 11.4%, also after a Reuters report that the company planned to run a reduced production schedule in January at its Shanghai plant. That news raised concerns about a drop in demand in the world’s biggest auto market amid a rising number of Covid-19 infections in China.
“There is no doubt that there are demand fears,” Great Hill Capital chairman Thomas Hayes said, citing a cut in Chinese rival Nio’s delivery forecast in the key market.
Hayes also added that Tesla shares were facing a “perfect storm” of high interest rates, tax loss selloffs and stock sales by some funds that own a significant amount of Tesla stock.
Tax loss sale is when an investor sells an asset at a capital loss to reduce or eliminate the capital gain realized by other investments for income tax purposes.
Meanwhile, a Reuters analysis It showed that prices for used Tesla cars were falling faster than those of other automakers, weighing on demand for the company’s new vehicles rolling off the assembly line.
musk previously attributed Tesla’s recent fights to raise rates from the Federal Reserve, stating that “people will increasingly move their money from stocks to cash, causing stocks to fall.”
The billionaire has dumped Tesla stock this year, selling nearly $4 billion of his own shares in Tesla to finance the buyout deal for Twitter, which he bought for $44 billion. he said mid december he would not sell additional Tesla shares “for at least 18 to 24 months.” However, financial files show that he sold millions after making similar promises in April 2022.
Analysts have raised the possibility of Musk being asked to step down as a Tesla executive over his actions on Twitter, as he already faces a lawsuit over his alleged failure focus on Tesla due to outside companies.
