Losses top $895bn as rival automaker warns of 'difficult' weeks ahead

Topline

Shares of Tesla plunged to a new two-year low on Tuesday as the beleaguered automaker – already reeling from concerns Chief Elon Musk has been too focused on Twitter – faces an extended shutdown of a key factory next month and wider skepticism the electric vehicle industry can meet lofty sales expectations as Covid-19 outbreaks soar demand in China, the world’s biggest auto market.

“Musk has lost his credibility with the wider investment community,” warns longtime bull Tesla. … [+] the stock’s massive losses this year.

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Highlights

Shares of Tesla fell 11.5% on Tuesday to $109, the lowest level since August 2020 and a stunning 73% drop from a peak of over $400 in November 2021.

Losses piled up in premarket trading immediately after Reuters reported the company plans to cut production at its Shanghai plant in January, according to an internal plan that allegedly reveals the automaker will operate between January 3 and 19, then halt production for the rest of the month to observe Chinese New Year .

Tesla, which disbanded its communications team in 2020, did not comment on the reports, although they did come as a company over the weekend. widened a planned eight-day production shutdown at the plant, which is the company’s largest volume of cars, in response to a growing wave of Covid-19 infections, workers and suppliers.

In emailed comments, Vital Knowledge Media analyst Adam Crisafulli called the news “the latest in a series of cautious headlines” on Tesla, noting that the company rolled out a $7,500 discount last week. $ – double what it was offering earlier this month – for its two most popular models in a bid to support year-end demand.

Fueling further pessimism, rival electric vehicle maker NIO on Tuesday morning warned it “faced challenges in deliveries and production” following the Covid-19 outbreaks in major cities across China this month and cut its planned fourth-quarter deliveries by around 15%, making fall its shares by 8%.

To monitor

Tesla’s fourth-quarter delivery numbers are expected in early January. Analysts are predicting another record quarter for the firm, with around 422,000 vehicles delivered. Less than that could still rattle investors.

Key context

Tesla shares soared to a record high last November but racked up big losses after Musk quickly began selling shares and this year drew attention to social media giant Twitter. Tesla’s stock slump made it the fifth-worst performing stock in the S&P 500 this year; the index is down 20%. Most of the decline has occurred since late September, when Twitter shareholders approved Musk’s $44 billion bid to buy the struggling social media network. “Musk has lost his credibility with the broader investment community,” Wedbush analyst Dan Ives said in a note to clients last week, blaming Tesla’s stock market troubles on Musk’s “broken promises.” , as he sells shares “again and again” despite previously saying he was “done” to do so.

crucial quote

“At the same time as Tesla cuts prices and inventories start to build globally… Musk is seen as asleep at the wheel from a leadership perspective,” Ives says, giving the stock a focus. year-over-year price of $125.35—less than 9% of the analyst’s bullish price target of $1,400 in January.

Surprising fact

Tesla’s market value peaked at over $1.2 trillion in November 2021. The stock is now worth $344.5 billion, representing some $895 billion in losses.

Tangent

Although Musk was at one point worth more than $215 billion, Tesla’s stock plunge pushed his fortune less than $140 billion, according to Forbesestimates. The 51-year-old claimed his title as the world’s richest person earlier this month when he was outmoded by luxury titan Bernard Arnault.