Tesla shares drop to cheapest level as car maker’s valuation drops below $500 billion
Billionaire Elon Musk has copped a lashing for his obsession with turning around Twitter – being accused of abandoning his electric car company in the process.
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Tesla shares have never been this cheap, and now furious investors are lashing out at its billionaire CEO Elon Musk after the electric car maker’s valuation value dipped below $US500 billion ($A728 billion) for first time in two years.
On Wednesday, Tesla shares were down 2.6 per cent at $US156.80 ($A228.47) on the New York stock exchange, taking its market capitalisation to $US495 billion ($A720 billion), and bringing its decline this year to 55 per cent.
It means Tesla shares are one of the worst performing stocks this year, lagging behind the performances of car makers GM and Ford alongside Apple and Amazon.
Jittery investors are now dumping shares amid fears of a US recession and soaring US interest rates, with predictions the rate could hit above 5 per cent next year.
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The electric car maker has also been hit by its own trouble, with production disruptions due to China lockdowns, supply shortages and soaring costs of raw materials.
Tesla also recalled more than 321,000 vehicles in the US because of a tail light issue last month.
It is the latest of multiple Tesla recalls in America in recent months, including one for just over 40,000 vehicles for a possible problem in the electric power steering system.
But Musk has been most criticised for his seemingly all-consuming Twitter takeover and focus on turning around the social media giant, with investors worried he could offload more Tesla stock to prop up the struggling company.
“Elon abandoned Tesla and Tesla has no working CEO,” KoGuan Leo, the third largest individual shareholder of Tesla, who describes himself of Musk’s “fanboy”, tweeted on Wednesday.
“Are we merely Elon’s foolish bag holders? An executioner, Tim Cook-like is needed, not Elon,” Leo wrote, referencing Apple’s boss.
Another fan of Musk tweeted that while he was a brilliant business leader, his polarising political views are hurting customer perceptions of Tesla cars.
“Customers don’t want their cars to be controversial. They want to be proud as hell to drive them – not embarrassed,” the man wrote.
Musk said on Tuesday that he “will make sure Tesla shareholders benefit from Twitter long-term” but did not elaborate.
As a result of Tesla’s woes, Musk dropped from the top of the word’s richest person list, according to Bloomberg and Forbes’ rich lists, after shares closed on Monday in New York down 6 per cent, shaving $US7.4 billion ($A10.8 billion) off his fortune, according to Forbes.
The richest person title now belongs to French businessman Bernard Arnault, the chief executive of the LVMH empire, which includes Louis Vuitton, Christian Dior, Givenchy and Tiffany & Co, among other well-known luxury brands.
But the bad news for Tesla looks likely to continue according to analysts, with some predicting shares could plummet as low as $US150 ($A218).
Goldman Sachs cut the price target of Tesla shares citing “softer” supply and demand, while Morgan Stanley warned that the brakes were “screeching on electric vehicle demand”, cutting its projections for adoption in the US.
Originally published as Tesla shares drop to cheapest level as car maker’s valuation drops below $500 billion
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