Tesla touches a 2-year low: Twitter may not be Elon Musk’s biggest trouble
For at least the past two months, Elon Musk has been in the news for his acquisition of Twitter and the policy changes he has been making there. Thousands have been laid off, and hundreds have resigned in response at Twitter. But it is Tesla, another company run by Musk, that is making it to the headlines of late and not for very encouraging reasons.
On Tuesday, Tesla’s share price fell to its lowest in over two years. On December 27 alone, it fell 11.4 per cent to close at $109.1 apiece, as per data from Nasdaq. The company’s total market capitalisation has fallen over 70 per cent in the past year, with 67 per cent of it in 2022 alone. Data showed that from $1.06 trillion on January 1, it fell to $344.5 billion on December 28.
The shares fell rapidly on Tuesday after a Reuters report said that the company is planning to reduce its production at the Shanghai plant, which has assembly lines for the Model 3 and Model Y, in January. Tesla also suspended production at the plant on Saturday. It is the most important manufacturing hub for Tesla.
“Tesla will run production for 17 days in January between January 3 to January 19 and will stop electric vehicle output from January 20 to January 31 for an extended break for Chinese New Year,” the report said. The company has never shut down its operations during the Chinese New Year.
The plant employs over 20,000 people and is responsible for over 50 per cent of the company’s total output.
Like other automakers, Tesla is facing falling demand amid recession fears and rising cases of Covid-19 in China. In China, the company has even slashed the prices of Models 3 and Y by 9 per cent to make up for the insurance costs.
According to a report by the Guardian, investors are also worried that Twitter is “taking much of Musk’s time”. The investors have grown weary of the 24/7 Twitter chaos that they say has distracted the “eccentric CEO” from the electric car company.
Experts said the stock was facing a “perfect storm” of high-interest rates, tax-loss selling and share sales.
Last week, Musk sold $2.58 billion worth of Tesla and had sold nearly $23 billion worth of its shares since April, when he started building a position on Twitter.
On December 23, Musk said that he wouldn’t sell any more shares in Tesla for “18 months or more”. It was likely an attempt to comfort shareholders.
“I’m not selling any stock for 18 to 24 months”, Musk said during an audio-only Twitter Spaces group conversation.
Musk then said he wouldn’t sell Tesla shares for two years but backtracked and said he would pause sales for at least one year.
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