Tesla’s stock market continues to plunge drastically. In question, investors panicked by the situation in China, but also by the behavior of the CEO of the company, Elon Musk.
On Tuesday, December 20, the manufacturer’s shares fell 8% to their lowest level in 52 weeks.
The situation in China is worrying
This fall can be explained by two reasons. The first is the very worrying situation of China, which has decided to completely reverse its zero Covid policy, leading to a huge increase in contamination in the country. As a reminder, the Middle Kingdom is an essential market for Tesla, the adoption of electric vehicles is indeed faster there than in the United States and Europe.
Upstream, investors are concerned about Elon Musk, who now seems to favor Twitter over Tesla. Last week, he did not hesitate to sell the equivalent of 3.6 billion dollars of his shares in the automaker, going against a promise made in April. “ Tesla Stock Price Now Reflects the Value of Not Having a CEO Great job from the Tesla Board – Time for a shake up says Ross Gerber, an investor in the company.
In response, Elon Musk assured that the situation stemmed from the macroeconomic environment: “ As bank savings account interest rates, which are guaranteed, begin to approach stock market returns, which are *not* guaranteed, people will increasingly shift their money from stocks to cash, what will cause stocks to fall “.
However, this justification does not seem to be able to explain everything: Tesla’s stock has fallen more than that of the other major American automakers since Musk announced his intention to buy Twitter in April 2022. Since that date, they have fallen by 59%, compared to 26% for Ford and 12% for General Motors.
Musk’s behavior worries at Tesla
Investors fear that Elon Musk’s management of Twitter will have a direct impact on Tesla’s health. The billionaire is indeed taking drastic measures: suspension of journalist accounts, appeals to the far right through conspiracy theories, etc. These decisions are likely to greatly chill Tesla’s leftist clientele.
At the manufacturer, we hope either for a greater investment from Musk, or for the latter to leave his post as CEO Obviously, the first option seems the most feasible: the businessman has just announced that he was looking for a new leader for Twitter, after users of the social network voted for him to leave.
Sources: CNBC, TechCrunch
14