Investors are learning a painful lesson that Tesla’s stock price is valued on Elon Musk’s pomp and circumstance in addition to the automaker’s fundamentals.
“Is Tesla a great company that produces a great car? Absolutely. Is Tesla worth what General Motors should be or Ford or Toyota should be? Of course not,” veteran venture capitalist Bradley Tusk said on Yahoo Finance Live (video above). “So much of Tesla’s share price is based on hype and the pixie dust that Elon Musk is so good at putting out there. When he risks puncturing that image, it doesn’t just reflect on Twitter but Tesla, SpaceX, and everything else he is doing.”
All eyes remain fixated on what’s happening to Tesla’s stock price amid Musk’s tumultuous takeover of Twitter. And over the course of 2022, Musk has unloaded about $23 billion worth of Tesla’s stock despite promising months ago to not sell any more.
Shares of the EV maker are down 20% so far this month, according to Yahoo Finance data, and down more than 55% so far in 2022.
Analysts point to several factors behind the plunge in Tesla’s once-Teflon stock price.
First, the risk of operational miscues at Tesla has grown as Musk focuses on restructuring Twitter. Goldman Sachs recently took a more cautious stance on Tesla’s stock, saying Musk’s ownership of Twitter has become “polarizing” and a cloud over shares.
Concerns also remain around manufacturing issues and the pace of sales for Tesla in China amid an uncertain approach to COVID-19 policies.
Lastly, competition in the EV space in the United States has only intensified this year — raising the risk of slowing growth for Tesla in 2023 and beyond.
“It’s a brutal spiral that Musk has caused with fears of him selling more stock pressuring the name along with demand concerns,” Tesla watcher Dan Ives told Yahoo Finance. “It’s a Ted Striker Airplane movie vibe right now with Musk and Tesla with all his attention appearing to be on Twitter for now.”
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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