After a tumultuous year in which its CEO, Elon Musk, acquired Twitter, the electric vehicle company Tesla (TSLA) looking forward to the end of 2022.
The stock got its own worse annual performance this year, loss nearly 70% of its value. Wall Street analysts have assigned much of the downfall of Musk’s volatile behavior.
Here is an overview of the difficult year for You’re here.
A promising start to the year
throughout the pandemic, Tesla shares skyrocketed.
In February 2020, Tesla was trading at $60 per share. By the first trading day of 2022, it had climbed to almost $400 per sharealthough the stock then fell under pressure.
Overall, the first quarter of 2022 was profitable for Tesla. Its operating margin reached a record level of 19%and the company delivered more than 300,000 cars. When inflation and global supply chain concerns began to catch up with the company, Tesla responded with several price increases for its products, and the stock rebounded.
More bear market relief came in late March, when Tesla unveiled a new giga-factory in Berlin, Germany. He brought hope at a time when China, largest electric vehicle market in the worldbegan to see a resurgence in COVID cases, and the stock jumped to $381 on April 4.
Also in April, Musk made an offer to buy social media platform Twitter for $54.20 per share. Tesla’s stock would soon suffer.
Developments in China and the Twitter Saga
With nearly 8% of electric vehicle market share in the country, Tesla revamped the Chinese electric car market with its largest gigafactory in Shanghai, which produced more than a million cars Since its opening in 2019.
Sales in China accounted for about a quarter of Tesla’s global sales (about $14 billion in 2021).
China has one of the lowest levels of openness to direct investment in the world, according to the Atlantic Council and Statista. It always took foreign companies to become partners with domestic Chinese companies to operate in China.
But in 2018, Tesla became the exception. Musk has reached an agreement with local authorities for the company to own only the Shanghai gigafactory with a 10% corporate tax cut, according to Tesla. SEC Filings.
Tesla’s footprint in China has helped Musk by becoming at one time the richest person in the world (a title he relinquished at the end of that year). But COVID quickly got in the way. Shanghai sank confinement, stopping the production of electric vehicles. In April alone, Tesla’s Chinese production fell by nearly 80%.
Meanwhile, Musk – a market player in the crypto world – revealed that Tesla held $2 billion in bitcoin, which Wedbush analyst Dan Ives called a “distraction and sideshow” in a statement. interview with. Yahoo finance.
Musk’s “distractions” have multiplied. He needed money to own Twitter and started selling Tesla shares in April. He sold $8.4 billion worth of shares in less than a week, followed by another $4.4 billion two days later. Tesla investors were disappointed that the stock was being used to fund Musk’s purchase, which further sent shares tumbling.
Following the sales announcement, Musk tweeted, “No further TSLA sales are anticipated after today.”
The second quarter was even more detrimental for Tesla stock. On May 24, the stock hit its lowest level for the quarter at $209 per share.
The difficult quarter put Tesla’s public image under scrutiny, and uncertainty about the stock grew even further. In June, massive layoffs in Nevada succeeded in a lawsuit against the company for violating federal law by failing to provide notice of layoffs.
Meanwhile, Musk continued to sell assets. He sold 75% bitcoin from Tesla by July for regular money, which at the time of purchase The musk had said he would not sell.
The stock has again entered a volatile zone. When Musk called to cancel the deal with Twitter, Twitter sued and Musk eventually went through with his purchase. Still, long-term relief for Tesla was not in sight.
The final showdown
At the end of July, Tesla stock appeared to be recovering.
With the reopening of Shanghai, annual sales expectations are met 6 millionhigher than previous estimates, since Hertz (HTZCEO said Yahoo finance that rental demand was “very, very strong”.
But the offer was not at par, and production disruptions had become the norm for Tesla. in July, sales have declined In China due to factory shutdown once again, this time for an upgrade of factory lines.
Then Musk sold 7.29 million Tesla shares, helping to send the stock 2% lower that day.
In an effort to stabilize the stock over the long term, Tesla’s board of directors wanted to conduct a Share split 3:1, which would increase the number of shares, attract interest from retail investors and make the stock more affordable for average investors. Although stock splits do not affect a company’s market value, they can drive stock prices higher as more shares are purchased. however, this did not happen in Tesla’s case.
October brought more COVID outbreaks, and China again confined. The same month, Tesla missed third quarter revenuealthough Musk said the company had “great demand for the fourth quarter.”
“Factories are running at full capacity, and we deliver every car we make and keep operating margins strong,” Musk said of Tesla. earnings call.
He also made the original Twitter deal $44 billion Price, which sparked a series of firings, lawsuits and numerous antics that changed the structure of Twitter. Some analysts have argued that Musk has become “quite distractedby Twitter, adding to Tesla’s chaotic year.
“In what has been a dark comedy show with Twitter, Musk has essentially tarnished Tesla’s history/stock and is starting to potentially impact the Tesla brand with this ongoing Twitter train wreck disaster,” said Wedbush senior analyst Dan Ives. wrote in a note in November.
Finally, December placed Tesla in the eye of the storm. The Berlin gigafactory has descended into “total mess” due to personnel issues. And while the U.S. EV market heavily favors Tesla – with around 65% market share, according to S&P Global Mobility data – the competition wins. At the end of November, S&P estimated that Tesla could slip to 20% market share by 2025.
Meanwhile, the weekly fuss over the new version of Twitter continued as Musk asked users if he should resign as CEO.
And Tesla stock has become increasingly volatile. Oppenheimer downgraded Tesla stock, and it hit a new low after falling around 70% since the beginning of the year. The title continued to fall until its lowest price in years.
“Don’t be too bothered by the stock market madness” Musk told Tesla employees in order to boost morale. “As we demonstrate continued excellent performance, the market will recognize it.”
Some Tesla bulls think the stock could climb higher next year, even after being one of worst performing stocks of 2022.
Still, critics think Musk has Damaged Tesla branding with its investment in Twitter and the outlook for Tesla in early 2023 doesn’t look much better.
The company announced a hiring freeze with layoffs in the first quarter of 2023. The Shanghai factory faces questions about whether it will continue to be Tesla’s production cornerstone, as it will not reopen in January for large scale production.
As for the stock sale, Musk said with a “overdue” recession, he won’t sell Tesla shares for a year and a half. But he has already broken that promise.
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Tanya is a data reporter for Yahoo Finance.
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