The stock went down again on Wednesday, making it the fifth time in the last six days that it has gone down.
Yes, the company’s investor day was the reason for the decline, but it’s probably not a coincidence that CEO Elon Musk is once again making news with Twitter.
Elon Musk, who owns Twitter and is the CEO of Tesla (ticker: TSLA), got into a troublesome Twitter storm on Tuesday after tweeting with and about a former Twitter employee who said on Twitter that Twitter owed him some money.
Musk said something about a physical disability that made him question his work ethic. After talking to the worker, he said sorry on Twitter and added, “It’s better to talk to people than send tweets.”
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Tesla’s stock fell 3% Wednesday. On Tuesday, shares fell 3.1%, while the S&P 500 SPX +0.14% and Nasdaq Composite COMP +0.40% each fell 1.5%. The stock didn’t do as well as the market, but it’s hard to say exactly why it didn’t do as well. As is usually the case with Tesla, a lot is happening.
There is a meeting of analysts. Since the analyst event on March 1, the stock price has gone down about 8%. The long event gave investors a chance to meet more of Tesla’s top managers. The company also said that its next plant will be built in Mexico. Wall Street, on the other hand, was hoping for more information and maybe even a prototype of a cheaper car that would help Tesla reach a larger market.
In 2022, the average price of a Tesla was about $54,000.
Tesla has cut the prices of its cars by a lot in 2023, which, in a way, led to a downgrade on Wednesday. Analyst Adrian Yanoshik at Berenberg changed his rating on the shares from buy to hold. His price goal went from $200 per share to $210 per share. (Tesla shares were worth about $170 when he set his price goal of $200 for the stock.)
In his report, Yanoshik said, “Tesla’s new plants offer a multiyear chance to make better use of capital and labor.” He still thinks Tesla has the best prices for EVs, but he says, “We downgrade our rating to hold now that the market seems to have accepted our buy thesis, which was based on unfounded fears of a price war.”
On January 6, Tesla’s stock hit a 52-week low of $101.81. This happened after Tesla lowered the prices of its cars in China. After the initial shock wore off, investors decided that the cuts were a smart way to move forward. Before the investor event started on March 1, Tesla shares had gone up 99% from their lowest point.
After that rise, Yanoshik doesn’t think the stock has much more room to go up.
Price, reviews, and tweets can all have an effect on Tesla stock. So can probes by the government. The Wall Street Journal reported Tuesday night that the Federal Trade Commission was looking into layoffs at Twitter because there were risks to consumer data.
Musk said that the FTC requests were “a shameful case of a government agency being used as a political weapon and the truth being hidden!”
In an email statement, an FTC representative said, “The FTC’s job is to protect the privacy of consumers.” “It shouldn’t be a surprise that the commission’s career staff are doing a thorough investigation of Twitter’s compliance with a consent order that was in place long before Mr. Musk bought the company.”
Long-term, Twitter doesn’t really matter for Tesla as long as Musk doesn’t have to sell Tesla shares to cover losses. Musk sold some of his Tesla shares so he could buy Twitter and help it grow. This upset Tesla investors in two ways. Investors don’t like it when people who work at companies they own sell shares. Musk also sells stock in a way that makes it hard to know what will happen, which can put short-term pressure on shares.
Investors would like it better if Musk sold his stock in a more organized way, like by using a broker to set up a block sale or a set plan like other executives do.
The other reason why Tesla stock is going down is that it went up a lot. After a big run, shares often stop going up while investors wait for the next thing to happen. When it comes to Tesla, less tweeting is a catalyst.