Elon Musk’s Twitter takeover has not just impacted the working of the social media platform, but also Tesla shares. After Musk sold his Tesla shares to pay for the acquisition, worried investors have questioned the fate of the electric carmaker.
It is reported that Tesla shares have fallen around 28% since Musk’s takeover of Twitter. Rubbing salt into the wound is the fact that rival automakers like GM and Ford have seen their share prices pickup after October.
Tesla Shares in Freefall
While Musk claimed the Chief Twit title, the stock price of Tesla languished at the bottom of the priority list.
On December 13, Tesla shares closed at $160.95, down by approximately 4% for the day. Just a little over a year ago, the stock price for Tesla stood at $409.97 in November 2021.
The fall is surprising considering that October inflation data showed that annual inflation is slowing. The Fed’s aggressive monetary policy stance has also dampened demand.
The Tesla stock prices have largely been affected by the company’s largest retail shareholder Leo Koguan calling on the company’s board to “perform shock therapy to resuscitate stock price” by going for a share buyback program.
Koguan has previously expressed his shock at the declining share prices, calling out Musk for selling his Tesla shares to fund the Twitter acquisition.
On December 14, Koguan went a step further and revealed that if the company doesn’t go for buyback, he will do it on his own.
I have decided: Peace
Peace to Elon Musk, BOD and all SH of Tesla
I will deploy my KQID time engine to produce abundant cash immediately to buy more Tesla shares. Tesla is so cheap, I buy buy buy Tesla Tesla Tesla
Peace to all
Peace to the world
— KoGuan Leo (@KoguanLeo) December 14, 2022
The electric carmaker has also suffered from weakening demand in China, which has derailed plans concerning the Shanghai plant.
Furthermore, Musk’s incendiary tweets with regards to Twitter have gone down well with industry watchers. His polarizing posts have prompted Nia Impact Capital founder and a Tesla shareholder, Kristin Hull to tweet, “So many issues with the Tesla brand, when the board can’t rein in the CEO.”
Customers are also weary of waiting for the promised self-driving technology update. Musk had claimed in 2015 that the company will make entirely self-driving cars in two years or less.
Seven years down the line, frustrated customers are taking the carmaker to court. The lawsuit, filed by the California firm of Cotchett, Pitre, & McCarthy, also cited numerous cases of crashes involving the use of Tesla’s driver assist technology.
Add to it the fact that Tesla has issued nothing less than 19 recalls this year, the automaker is not gaining points. People’s faith in the company is waning and that is reflected in the stock price.
Unless something is done quickly, Tesla might just slip off the radar as competition heats up in the EV sector. Many established automakers have affordable and efficient EVs lined up for release in 2023.
Musk Loses Top Spot on Richest People List
Tumbling stock prices of Tesla have also affected Elon Musk’s net worth. Once worth nearly $340 billion, Musk has lost the top spot on world’s richest list to Bernard Arnault, the CEO of LVMH.
Bloomberg, which tracks the wealth of millionaires, reported that Musk had slipped to the second spot. The billionaire’s net worth now hovers around $177 billion.
In April, before Musk announced his Twitter plans, Tesla shares were trading around $340 per share. As of today, it has tumbled by nearly $200 worrying investors and other stakeholders.
While many have rallied around Musk on Twitter, one cannot ignore the impact of his Twitter deal on Tesla stock. In April, the billionaire sold around $20 billion worth of Tesla shares to fund his Twitter purchase.
After the deal was completed in late October, and Musk appointed himself Chief Twit, investors expressed concern over his workload. They were worried that he would be unable to juggle being the chief executive of three companies — Tesla, SpaceX, and Twitter.
Tesla’s lackluster performance in the last quarter has also affected its market valuation. The company posted $3.3 billion in profit and $21.45 billion in revenue in Q3.
Risk-averse Wall Street is keeping a close eye on Musk, who has reportedly taken to sleeping at the Twitter headquarters in San Francisco.
Although Musk assured investors that “We’re looking forward to a record-breaking Q4,” during a Tesla call, seasoned veterans are waiting for proof.
Musk’s wealth fell by over $100 billion after Tesla shares, which account for the majority of his fortune, slipped down in rank.
It is clear that investors are waiting for solid proof before putting their faith in Tesla once again. In the meantime, Tesla might need to keep a watch on Leo Koguan’s strategy.
