Tesla stocks drop

Difficult days for Tesla stocks

After nearly two years, Tesla shares hit their lowest level this week after Elon Musk, executive chairman of the company, announced that he sold another $3.95 billion worth of shares in the electric vehicle maker. 

Shares plunged 7.2% to $177.59, the lowest since November 23, 2020.

This year Tesla shares are down nearly a little more than 50% and closing at $174.04 on Wednesday. It fell 58% from its all-time closing high of $409.97 on November 4, 2021. 

As well as the company’s market cap has fallen this year from more than $1110 million to $550 billion, dropping nearly 3% in early trading Thursday, but regained its way back to breakeven later in the day before pulling back almost 2%. As reported by Forbes.com

Is Twitter one of the reasons for this fall?

The $44 billion purchase of Twitter may have triggered nervousness in the wake of Musk’s latest stock sale of the world’s most valuable automaker, analysts report. 

The significant acquisition has raised concerns for investors, casting it as a possible distraction from running Tesla or diverting resources to the social networking company. 

Some investors also feared the possible impact on Tesla’s brand and company sales and likely pressure on Tesla from countries trying to control online speech.

According to Ed Moya, senior market analyst at OANDA, “Musk might have needed the money to finalize the Twitter deal, but restructuring the company and righting the ship is going to be more expensive than he probably expected.”

What could happen to Tesla’s stock?

Even though Tesla stocks are going through a rough patch, there may still be hope for the company.

In its third quarter, Tesla grew revenue by 55% yearly. And while management has accepted a recessionary environment in Europe and China, still the company may be on track for a solid fourth quarter.

Morgan Stanley analyst Adam Jonas thinks Tesla will outperform soon, even though electric vehicle sales across the industry are expected to slow. 

And also, considering that earlier this week, the company delivered its first long-haul truck to PepsiCo and is preparing its Texas factory to ramp up Cybertruck production next year. 

Tesla is positioning itself as the vehicle people aspire to have in their lifestyle. This is the essential quality of the company and what speaks to the power of its brand, which increases the odds in favor of continued market share gains and profitability for investors.

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