Uncertain sales, Elon Musk distracted… Tesla suffers in the stock market in 2022

Tesla lost two-thirds of its stock market value in 2022, the victim of fears about demand for electric cars, dismay at Elon Musk’s travails at the helm of Twitter and the end of easy money on Wall Street.

The manufacturer has even increased its shipments by 45% during the first three quarters, despite supply problems, and generated almost $9 billion in profit during this period, despite sharply increasing expenses. But it is below the long-term target of increasing deliveries by 50% per year.

Stronger competition

And observers are worried about a slowdown in sales. In the past two years, demand has exceeded supply in the electric car market, but this trend should “reverse” in 2023, says Adam Jonas, analyst for Morgan Stanley. “Between a worsening macroeconomic environment, unaffordable prices for many and growing competition, there are obstacles to overcome. »

Many traditional manufacturers now offer electric versions, whether it’s Ford, General Motors, Nissan, Hyundai, Kia or Volkswagen. And in the luxury car category came Mercedes-Benz, BMW, Audi, Polestar, Lucid and Rivian.

Production suspended in China

Tesla still largely dominates in the U.S. with a 65% market share in the first nine months of the year, but that’s down from 79% in 2020, and that number should drop to less than 20% in 2025, S&P Global analysts predict. To boost sales in the fourth quarter, the group offered unusual promotions in the country.

The situation in China is also alarming: according to press releases, production is currently suspended at the factory in Shanghai for a longer period than originally planned.

Tesla needs a leader

However, several analysts point out that Tesla maintains a clear lead in terms of technology, cost management and scale in a rapidly growing market. Baird believes the group is the “best positioned in the auto market” and still recommends buying the action.

However, the shadow of Twitter, bought for 44 billion dollars by Elon Musk in late October, hovers. Tesla needs a “leader who can guide it through the storm” and not a boss “who is Twitter-focused,” said Wedbush’s Dan Ives. On the one hand, the multibillionaire sold several billion dollars of Tesla shares to finance the purchase and then the operating costs of his new toy, and sold again for 3.6 billion in early December, when he had confirmed in the spring that he did not had any intention of selling more.

Tesla suspended from Twitter

“Musk has lost all credibility with the investment community,” says Dan Ives, citing “broken promises” about stock sales, the “Twitter fiasco” and “political controversies” on the platform.

It has become “unsustainable” to value Tesla without taking into account Elon Musk’s erratic management of Twitter, says Colin Rusch of Oppenheimer, who fears some buyers will choose a rival brand because of the fanciful positions the company takes. platform.

Victim of the general decline in the stock markets

In defense of the entrepreneur, Tesla’s action has also suffered from the general decline in stock markets this year. In a Twitter conversation in mid-December, Elon Musk acknowledged that rising interest rates and the economic situation will likely slow demand for Tesla.

But “I still continue to predict that Tesla will be the highest-valued company in the world in the long term. On Wednesday, in a message to the company’s employees seen by CNBC, he urged them to “not worry too much about stock market madness”. The group’s share had risen more than 700% in 2020 and then 50% in 2021. It recovered nearly 13% in the last three days of the year, but was still down 65% from 2022, giving Tesla a market value of 389 billion dollars.

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