Wall Street downgraded Tesla stock’s price targets Tuesday, causing shares to fall 8.12%. Analysts worry that Musk’s hostile takeover and micromanagement of Twitter distract him. China sales could also be affected by COVID-19 spreading after the Chinese government ends its strict restrictions.
Tesla shares fell to $138, a record low for the company in more than two years, at the time of this article’s publication. Analysts believe investors are worried that Musk will sell more Tesla shares to finance Twitter and that his actions on social media are causing damage to the brand.
Musk’s last week’s sale of shares worth $3.5 billion was one of many stock dumps he has made this year. Some investors have called on Tesla’s board to replace Musk, the CEO, and to protect shareholders from the stock price drop.
“Tesla stock price now reflects the value of having no CEO. Great job tesla BOD – Time for a shake up,” tweeted Ross Gerber, a portfolio manager at Gerber Kawasaki.
It is not clear whether Tesla EV sales were affected by Musk’s Twitter involvement. Tesla cars are still considered excellent automobiles in all aspects of battery range, technology, safety, and performance.
To see the 2022 fourth-quarter numbers, we’ll need to wait until January. However, according to Gordon Johnson, CEO of GLJ Research, and Tesla bear, the concerns about China sales are justified.
Johnson pointed out that China is Tesla’s most lucrative and largest market during a Twitter Spaces event on Tuesday. Although it is difficult to track the sales of Tesla units per quarter in different regions, the China Passenger Car Association keeps track of them monthly.
This totals 188.317 units in China for the third quarter. This is slightly over half of all global units sold, or 343,830 units in Q3. China has a higher rate of EV adoption than the U.S. or Europe. This means it makes up a greater percentage of Tesla’s global sales.
The Chinese government’s total reversal of its previous strict restrictions could lead to a decline in sales. Investors are concerned about this. Tesla will have to depend more on its Western markets if that happens. The Twitter dilemma could lead to problems.
“Is the Tesla EV brand being impacted by all this Twitter drama, meaning all the controversy?” said Gary Black, a managing partner of the Future Fund, during a Twitter Spaces session Tuesday.
“Is it causing people to either cancel their orders or not order Teslas or, you know, just causing the brand to fall out of favor among people who buy EVs? I don’t see it, but that’s one of the worries that institutional investors are asking me.”
Black stated that he believes Musk’s personality, particularly his political rhetoric about the “woke brain virus,” will eventually impact the brand.
He also said he would advise the board to “pull Elon aside” and “pull Elon aside and say, look, you may have these political views, but you’re not helping the Tesla brand by articulating them.”
Black said, “I don’t know what he gets out of insulting his client base on the left.” Musk posted a tweet poll asking for opinions on whether he should resign as CEO of the social media site. He said that he would follow the results.
Musk said that he believes bots rigged the poll. Voters supported him leaving. Musk has yet to confirm that he is seeking a new CEO. Black stated that investors are selling Tesla stock because they are uncertain whether Musk will keep his word.