After closing at $167.81 on November 21st, the value of Tesla’s stock has dropped 49% since Elon Musk offered to buy Twitter for $44 billion on April 14th. It is now down 58% on the year as of this writing, and 25% since Musk assumed control of Twitter on October 27th. According to Bloomberg, he has lost $100.5 billion in 2022 so far, the most of anyone tracked in the Bloomberg Billionaires Index.
As Market Watch points out, the markets have been tough on both tech companies and electric car companies, but even so, Tesla is an underperforming outlier. Shares in Tesla reached a two-year low on November 21st, closing as the worst-performing stock in the S&P 500 and the second-worst on the NASDAQ exchange. For comparison, the S&P is down about 17% on the year, and has seen modest gains in November. Even accounting for averse conditions, investors have been bearish on Tesla.
Part of the slide can be traced to Tesla announcing back-to-back recalls this week, one for malfunctioning airbags on 30,000 Tesla Model Xs, and another for faulty taillights on 321,628 Model 3 and Model Y vehicles. But the trend line resembled a ski slope even before the recalls. With oil futures dropping, suggesting lower gas prices are on the horizon, many analysts expect a cool EV market in the short term.
Some of this may be a long overdue correction. As we wrote last year when Musk became the richest person in the world off of skyrocketing Tesla stock, “Tesla’s market cap doesn’t just suggest that the company is significantly more valuable than Volkswagen, GM, or Ford — it implies that Tesla is worth more than the nine largest automakers combined.” In other words, the stock price had a lot of future growth built into its current price — or Tesla investors were delusional.
Musk’s own image has also taken a hit amid a rocky Twitter takeover. His plan to charge users $8 a month for a blue checkmark backfired, as pranksters impersonated major companies like Nintendo, Eli Lilly, and PepsiCo, and Musk complained of a “massive drop in revenue” as advertisers pulled spending. And while Musk has claimed that Twitter has seen record usage, many longtime users have also left the platform. Just this week, Trent Reznor quit Twitter, leaving Musk to label him a “crybaby,” and Jack White wrote an open letter excoriating Musk for reinstating the account of former president Donald Trump.
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