Shares in Tesla 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 car maker faces a difficult financial period.
The company’s shares have lost more than half their value since early October. Investors worry that Twitter will take up much of Musk’s time now that he is the social network’s owner and CEO.
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 he would find a new CEO to replace him after a majority of Twitter users polled voted for his resignation. Experts say his erratic behavior has undermined confidence in Tesla, with shares down 73% year-to-date in November 2021.
Tuesday’s loss, which sent Tesla shares down 11.4%, also followed a Reuters report that the company planned to run a reduced production schedule in January at its Shanghai plant . The news sparked concerns of a drop in demand in the world’s biggest auto market amid a rising number of Covid-19 infections in China.
“There’s no doubt there are demand fears,” said Great Hill Capital President Thomas Hayes, citing a cut in delivery forecast for Chinese rival Nio in the key market.
Hayes also added that Tesla shares were facing a “perfect storm” of high interest rates, tax-loss sales and stock sales by some funds that hold a significant amount of the company’s stock. Tesla.
A tax loss sale is when an investor sells an asset at a capital loss to reduce or eliminate capital gains made by other investments for income tax purposes.
Meanwhile, a Reuters analysis 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 struggles to the Federal Reserve’s rate hikes, stating that “people will move more and more of their money from stocks to cash, driving stocks lower.”
The billionaire himself has unloaded Tesla stock this year, selling nearly $4 billion of his own Tesla stock to finance the deal to buy Twitter, which he bought for $44 billion. He said in mid-December that he would not sell additional Tesla shares “for at least 18 to 24 months.” However, financial filings show it sold millions after making similar promises in April 2022.
Analysts have raised the possibility that Musk could be asked to step down as a Tesla executive over his actions on Twitter, as he already faces a lawsuit over his alleged failure to focus on Tesla because of companies external