Source: Beijing Business Daily
As the richest man in the world, Musk never seems to care regarding the opinions of others, and even “busy” to create topics. But that doesn’t hide the risks Tesla faces. Shares of Tesla plummeted nearly 16% through last week’s close to close at $223.07, their worst weekly performance since March 2020. Tesla shares have fallen more than 44% since the beginning of the year. Although the U.S. stock market as a whole has been under a lot of pressure due to the recent rate hike by the Federal Reserve, with frequent accidents and Musk, who often speaks out, Tesla cannot escape the crisis of confidence and the enemy.
less than expected delivery
For a company, there are indeed many factors that affect the stock price, but for Tesla, which is in the growth stage, its sales performance can be said to be an important indicator for investors to determine whether the company is operating well. The third-quarter delivery data disclosed by Tesla in early October obviously did not meet investors’ expectations.
According to Tesla’s third-quarter production and sales report, it delivered a total of 343,830 electric vehicles in the quarter, of which Model 3 and Model Y delivered a total of regarding 325,200 vehicles, accounting for nearly 95%. It seems that the monthly average exceeds 100,000. The number of vehicles delivered is not a lot, but this number is still lower than the previously expected 357,900 vehicles, which also caused its stock price to drop 8% on October 2, the day it was announced.
Regarding the lower-than-expected delivery volume and the falling stock price, a reporter from Beijing Business Daily contacted Tesla, but has not received a reply as of press time. “While Tesla continues to point to tight supply limiting deliveries, the potential for demand destruction remains high,” JPMorgan analyst Ryan Brinkman said. In addition, Tesla’s frequently exposed problems such as insufficient long-distance battery life, system failure, and brake failure have also made many consumers stop and watch.
In addition, the less-than-expected intelligent robot technology developed by Tesla is also an important reason for the decline in the stock price. On October 1, at the 2022 AI Day event held by Tesla, Tesla CEO Elon Musk officially showed the prototype of the humanoid robot “Optimus” developed by the company. However, the fact that robots need to rely on manpower and slow action shows that their intelligent robot technology still has a long way to go.
The only good news comes from the Chinese market. Although Tesla’s new Gigafactories in Austin, Texas, and Berlin, Germany have achieved substantial increases in production, Tesla’s Shanghai Gigafactory is still the main force in Tesla’s production capacity. On October 9, according to Tesla China, Tesla delivered more than 83,000 vehicles in September, setting a new record for monthly deliveries once more.
In addition, data from the China Passenger Transport Association shows that from January to August this year, Tesla’s Shanghai plant has completed sales of nearly 400,000 vehicles, plus 83,000 vehicles in September. Deliveries of 480,000 vehicles were flat for the year.
In this regard, Cui Dongshu, secretary-general of the Passenger Federation, said that domestic new energy vehicle sales remained strong in September. The internal reasons for the recent strong retail sales are the release of previous consumption and policy promotion. In addition, the supply of new energy vehicles has improved, and the superimposed oil price is still high and electricity prices are locked, which has also led to an increase in the number of electric vehicle orders.
Musk cashed out for Twitter
In addition to Tesla’s own performance not as expected, Musk, as Tesla’s CEO, also has an important impact on Tesla’s stock price.
Earlier, Musk had publicly stated that he planned to acquire social app Twitter at a price of $54.20 per share. This acquisition will cost more than $44 billion. Once the news was announced, Tesla’s stock price plunged sharply, because many investors Worried that Musk will sell his Tesla stock to cash out in order to raise funds.
After that, Musk started the cash-out journey. Statistics show that this year alone, Musk has sold more than $15 billion in Tesla stock. He sold $8.5 billion in stock in April and another $6.9 billion in August. The reason is mainly to raise funds for the acquisition of Twitter.
It wasn’t long before Musk seemed to regret it once more. He took issue with Twitter’s large number of “fake accounts” and announced it was suspending trading in July. However, Twitter immediately took it to the court, asking it to fulfill its previous acquisition commitment.
Musk changed his mind on Oct. 4 as the trial progressed. Twitter announced that Musk’s lawyers sent a letter to the company saying that they agreed to complete the acquisition in accordance with the agreement signed on April 25, that is, to deliver the $44 billion business at $54.2 per share.
Musk already owns regarding 9% of Twitter and needs $37.5 billion to buy the rest, he has regarding $13 billion in debt to help with financing, and has sold regarding $15 billion of Tesla’s Stock, and another $7 billion from other people, so he might have sold regarding $2 billion in Tesla stock.
However, Musk will not be able to do this until Tesla reports its third-quarter earnings on October 19. Larry MacDonald, author of the Bear Traps Report, believes investors will use this window to get ahead of Musk and sell before he can.
future risk
Despite the sell-off, Tesla’s market capitalization still exceeds that of most S&P 500 stocks. Tesla is currently trading at 51 times its expected earnings, compared with the average price-to-earnings ratio of 16 for the S&P 500 and 23 for Apple.
Nicholas Colas, co-founder of DataTrek Research, said: “Tesla is currently unique among large U.S. tech companies in that its underlying growth trajectory is much clearer than any other company. However, among the S&P 500 constituents , it also has the highest ‘key man’ risk. Musk’s focus on Tesla is very valuable to many investors.”
As the richest man in the world today, Musk also has star companies such as SpaceX and brain-computer interface. Some investors worry that a successful acquisition of Twitter might distract Musk from Tesla. Zacks Client Portfolio Manager Brian Mulberry commented: “Musk may be a genius businessman, but he’s still human, and there are still only 24 hours in the day.”
In addition, the current global economic recession warning has also caused investors to worry regarding whether Tesla’s previous sales forecast will be affected by the general environment. Due to the poor economic performance, many consumers have slowed down the purchase process of high-priced items, including cars, which may also adversely affect Tesla’s future sales.
In addition, many investors are cautious. They believe Tesla faces a variety of headwinds. For example, “the impending recession, the growing threat of competition, consumers being more cautious in their spending due to high inflation, and overvalued company stock prices.”
Catherine Faddis, chief investment officer at Grace Capital, pointed out: “While other high-growth, high-value stocks suffer, will Tesla stock maintain a halo effect and continue to be strong? Not so far this year.” In Some Professional Investing In the opinion of the reader, the current Tesla stock price still has a certain amount of moisture.
Beijing Business Daily reporter Fang Binnan Zhao Tianshu
