Shares of Tesla sank to an 11-month low on Tuesday after a bearish analyst note tacked on to a flurry of concerns for the electric-vehicle maker and high-profile chief Elon Musk—even as one of the firm’s staunchest bulls doubled down on its massive investment.
Tesla stock fell 7% to $628 on Tuesday, pushing the stock down nearly 49% from its all-time high in November and wiping over $30 billion from Tesla’s market capitalization, which has fallen to $650 billion from a peak of more than $1.2 trillion.
Prompting the steep decline, Daiwa analyst Jairam Nathan on Tuesday morning lowered his price target for Tesla shares to $800 from $1,150—telling clients Covid lockdowns in Shanghai, where the electric-vehicle maker operates its so-called Gigafactory, as well as supply issues impacting its Austin and Berlin plants, will cut deeper into earnings than previously expected.
Nathan forecasts the headwinds will push deliveries this year down by 180,000 vehicles, meaning Tesla will deliver 1.2 million vehicles this year, as opposed to the 1.4 million units previously expected.
The note comes one day after Wedbush analyst Dan Ives cautioned Twitter’s shareholder meeting this week will “surely kick off some more fireworks” between Musk and the social media firm’s board, adding to the “major overhang” as investors worry the proposed takeover could divert his attention from Tesla.
“Tesla investor patience is wearing very thin,” Ives said about the resulting back and forth, with Musk suggesting he’ll lower his offer due to concerns about bots on Twitter, while the company’s board says it won’t alter the deal.
Despite the bearishness, Ark Invest, the New York City investment firm helmed by famed stock-picker Cathie Wood, disclosed it bought $10 million in Tesla shares on Tuesday—adding to its stake for the first time since February less than a week after the stock lost its top spot on Ark’s flagship fund to streaming giant Roku.
“This [takeover] circus show has been a major overhang on Tesla’s stock and has been a black eye for Musk so far,” Ives said Monday, adding that “major market pressure for tech stocks” has only added to the uncertainty.
Shares of Tesla have racked up big losses since Musk suggested he would sell about 10% of his stake in November, with prices only collapsing further as the broader market struggles in the face of rising interest rates. Adding to concerns for Tesla, however, “the worst supply chain crisis seen in modern history” has threatened the firm’s production in highly profitable China, notes Ives.
The tech-heavy Nasdaq has plummeted 29% this year. Tesla, meanwhile, has plunged 47%. Even though its stock has struggled, Tesla reported its most profitable quarter in company history last month, posting $3.3 billion in first-quarter income fueled by record deliveries. $199 billion. That’s how much 50-year-old Musk, the world’s richest person, is worth, according to Forbes.
Critics by David Gura
Taking over Twitter may be good for Elon Musk, but it hasn’t been good for Tesla’s shares. One day after Twitter announced it had accepted Musk’s $44 billion takeover bid, Tesla shares sank 12.2%, wiping out more than $125 billion off the electric vehicle maker’s market value. The falls come as Wall Street fretted about how the deal could impact the electric vehicle maker and its stock price.
When Musk announced he had secured the money to finance the transaction, he said he would cover $21 billion himself, with banks helping finance the other half. What remains unclear is how he will come up with that money — whether he will sell some of the Tesla shares he owns, borrow against them, bring in additional investors, or all three.
There is also growing concern about whether owning Twitter would bring him into conflict over free speech with the government in China, a key market for Tesla where the auto maker also has significant production. On top of that, there is the risk Musk could become distracted by his latest acquisition. Musk is the CEO of Tesla and Space-X and is involved with other business ventures such as Neuralink, which develops brain implant technology, as well as The Boring Company, which makes tunnels.
If Musk does offload some of those holdings, it could drive Tesla’s share price down further. This is something the company warned investors about in its latest annual report, filed in February with the U.S. Securities and Exchange Commission. “If Elon Musk were forced to sell shares of our common stock that he has pledged to secure certain personal loan obligations, such shares could cause our stock price to decline,” the company wrote.
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