Throughout 2022, Tesla stock saw its value sink. The falling prices have taken a substantial bite out of Elon Musk’s net worth, and other Tesla investors are also concerned about the falling prices.
Let’s take a closer look at Tesla stock’s dramatic fall, what caused it, and what may happen moving forward.
Tesla stock has taken a notable fall. The company’s stock price started 2022 around the $400 mark. Since then, TSLA hit a low point of $104.65 per share. The dropping share price equates to billions of dollars in lost value throughout the year. TSLA closed at $108.06 at close of business yesterday, January 3, 2023.
Strained economic times certainly aren’t helping the electric car company. However, the tumultuous economy isn’t the only factor putting downward pressure on Tesla’s stock prices.
Here’s a closer look at some of the events that are pushing Tesla prices down.
After an elaborate negotiation, Elon Musk bought Twitter. When he purchased the company, he became the CEO and immediately started making major changes to the platform.
Twitter’s transition into Musk’s leadership has been anything but smooth. As the new CEO, he instituted significant downsizing measures. Plus, many major advertisers pulled out of the platform.
In short, Twitter is losing money, and Elon Musk’s attention has been focused on getting the social media platform back on track.
Selling Tesla stock is one way that Musk has been able to fund his Twitter endeavor. In mid-December, Musk sold around 22 million shares of Tesla, netting him around $3.6 billion. He then tweeted that he wouldn’t sell any more TSLA shares for the foreseeable future.
Many Tesla shareholders are uncomfortable with the amount of time, energy and money Musk is spending on his Twitter takeover project.
Moreover, many people are unhappy with the controversies he is stirring up on Twitter. In addition to welcoming back some banned users, Musk has also allowed the release of Twitter’s internal files related to COVID and presidential elections.
As controversy surrounds Musk, many are unwilling to support Tesla as a company because he is the CEO. Specifically, a recent survey has found that Tesla’s favorability among self-described Democrats fell to 10.4% in the U.S. That’s down from 24.8% in the previous month.
In late December, the electric car maker published a report that indicated that the company would run at reduced capacity at its Shanghai plant. The Shanghai plant is a key component of Tesla’s operations.
The news of reduced production raised concerns about potentially falling consumer demand. As with any company facing a potential drop in demand, many investors responded by selling off their shares.
It’s no secret that Elon Musk is known for pushing technology forward. But, in many cases, the actual timeline of exciting projects is longer than initially promised.
For example, the Tesla Cybertruck was unveiled in 2019 with promises of production in 2021. However, the production isn’t scheduled to start until 2023.
There was a similar issue with the Tesla Semi. This was expected to roll out in 2019, but the company started delivering the vehicles in 2022.
The delayed timeline on many exciting projects unveiled by Tesla is another reason for investors to consider pulling back on stock purchases.
According to the National Bureau of Economic Research, the U.S. economy is not currently in a recession. That said, there is no denying that the economy is experiencing significant turbulence.
Many companies are seeing their stocks take a hit with a potential recession looming. As a car manufacturer, Tesla will likely be hit hard during a recession. After all, many cannot afford to upgrade to a luxurious electric vehicle amid tough economic times.
A significant amount of uncertainty in the market is another reason for Tesla’s stock to continue falling.
After losing around 70% of its share price in 2022, many investors are looking for the bottom. It’s not every year that a company loses over 50% of its share price. However, there’s no timeline for when Tesla’s stock will bottom out.
No investor can predict the future. Tesla’s stock may rebound in the New Year, but it might have a long way to fall before it begins the uphill climb.
Tesla is one exciting cleantech company, pushing the boundaries of electric vehicles. However, it’s not the only company working on changing the world through clean tech.
As technology marches toward more efficient transportation, investors have much to gain by monitoring the changes.
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Tesla stock took a nosedive in 2022. Only time will tell if the free fall is over or not.
Unfortunately, Tesla stock might fall more in the coming year. Nevertheless, we may also see a big rebound of this once-coveted stock.
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