Elon Musk tries to explain why Tesla shares are crashing

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Shares of electric vehicle maker Tesla fell to a new 52-week low on Tuesday, closing around $138 per share, down 8% for the day in an otherwise mixed day for stocks.

CEO Elon Musk tried to attribute the fall in prices in part to macroeconomic factors.

Longtime Tesla bull Ross Gerber wrote in a tweet: “Tesla stock price now reflects the value of no CEO. Great job tesla BOD – Time to shake up. $tsla.” Gerber launched an informal campaign to get fellow shareholders to vote to appoint him to Tesla’s board.

Musk responded, in a tweet, “As bank savings account interest rates, which are secured, begin to approach stock market returns, which are unsecured, people will move their money more and more stocks into cash, causing stocks to fall.”

Elon Musk speaks during a press conference at SpaceX’s Starbase facility near the village of Boca Chica in South Texas on February 10, 2022.

jim watson | AFP | Getty Images

But Tesla shares have fallen more than other major automakers since Musk announced plans to buy Twitter in April 2022. Since then, Tesla shares have fallen 59%, compared to Ford’s 26% and 12 % for GM. The S&P 500 is down 14%.

The Tesla chief has plenty of distractions, as Gerber notes: Musk has sparked controversy as the new owner and CEO of Twitter, the social media giant he acquired in a leveraged buyout in late October, and is also the CEO of a major defense contractor, SpaceX.

Musk sold billions of dollars of his Tesla holdings to fund the Twitter deal, including a $3.6 billion sale earlier this month.

He told Twitter employees he sold Tesla stock to ‘save’ their business while cutting more than half of the company’s workforce and rolling out a slew of product and policy changes. , some of which were later cancelled.

As Musk focuses on his new role as “Chief Twit” since late October, Tesla is offering discounts and incentives to sell cars in China, where it operates a large factory in Shanghai; fight to make its new factories in Austin, Texas, and Brandenburg, Germany efficient; and in the face of persistent supply chain challenges endemic to the automotive industry, as well as soaring energy prices in Europe, which could reduce the attractiveness of a battery electric vehicle for many drivers.

Learn more about electric vehicles from CNBC Pro

These, among other challenges, led Mizuho Securities and Evercore ISI to cut their Tesla price targets on Tuesday.

Analysts at Mizuho Securities wrote in a note that “in the near term, we see potential weakness in Tesla sales as macroeconomic headwinds and a weaker consumer could lead to lower demand for more expensive electric vehicles.” . The company is still optimistic about Tesla in the long term, citing the company’s new factories as a competitive advantage, and new electric vehicle tax credits on the horizon in the United States that could “accelerate demand ” on a national level. In China, some EV credits expire in early 2023. The company has a price target of $285 and a buy rating on Tesla stock.

Vanderbilt University assistant professor Joshua White, who previously worked as an economist for the U.S. Securities and Exchange Commission, told CNBC: “Only part of Tesla’s decline in value can be attributed to rates. Twitter surplus is an important element China is another important element We still don’t know if China will be fully open, and we see that there is supply and demand pressure asking here in light of the rise in covid cases and disruption.

He also said Elon Musk may have lost shareholder confidence when he said in April that he had no plans to sell more of his Tesla shares, but had sold billions more. .

“He seems to be selling stocks in really big blocks, saying ‘I’m done and I’m not selling anymore. But talking costs nothing. He says this and then sells more shares. So the more you say this and investors think it probably hasn’t finished? The less convinced they will be that the price will rebound.

On Wednesday, Musk responded to a tweet suggesting he “wouldn’t even consider his behavior impacting the stock price.”

“Perhaps so, in which case… buying opportunity!” Musk responded on Twitter. “I keep saying the Fed rate is crazy because the data I see indicates we’re already in deflation. If that’s true then the real rate of return on Treasuries is about close to that of the S&P500. The very smart investor I spoke to today said he’s shorting S&P…”

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