Latest data shows that Tesla’s stock is down by about 70 per cent with the shares trading at $122. Yesterday, Morgan Stanley analysts said the “company’s sliding stock price represents a buying opportunity, but they cut its price target from $330 per share to $250.”
“Morgan Stanley still believes the company is somewhat undervalued as a result of the big recent sell-offs, citing its head start over the electric car competition, and potential tax advantages as a result of the Inflation Reduction Act passed earlier this year,” Jordan Valinsky and Chris Isidore argue.
The financial turbulence facing Tesla has significantly impacted the fortunes of Elon Musk, until recently the richest man on earth. He lost the title two weeks ago to Bernard Arnault, the chairman of French luxury goods giant LVMH (LVMHF).
Per Bloomberg Billionaires Index, Musk is now worth $132 billion, which is less than half what he was worth at the beginning of the year.
Valinsky and Isidore note that: “A popular misconception has emerged about Elon Musk and Tesla: The megabillionaire’s love affair with Twitter is the main reason Tesla shares have lost so much value this year.”
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“Even as Musk signals he may give up his CEO title at Twitter, investors became concerned that the outlook for Tesla’s sales and profit is taking a turn for the worse. A sign of the weakening demand: Tesla has announced a rare sale. The company offered two rebates for buyers who take delivery of a vehicle before the end of the year, initially offering a $3,750 discount earlier this month,” the duo writes.
Dan Ives, a tech analyst with Wedbush Securities says: “Tesla clearly is starting to see demand cracks in China and in the US at a time that EV competition is increasing across the board…The price cuts that Tesla enacted was the straw that broke the camel’s back on the stock.”
It is widely understood that another possible reason Tesla’s stock is plummeting is because of the US economy which experts say is staring into a looming recession.
“I think there is going to be some macro drama that’s higher than people currently think,” Musk was quoted by Reuters as to saying, adding that “homes and cars will get disproportionately impacted by economic conditions.”
