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Stocks Of Tesla Is On Track To Have Its Worst Month, Quarter And Year On Year

Stocks Of Tesla Is On Track To Have Its Worst Month, Quarter And Year On Year
With the stock closing down 11% on Tuesday, the sell-off in Tesla accelerated. Elon Musk's electric car company, which has passed Meta to become the worst-performing stock among the most valuable tech companies in 2022, is just days away from finishing its worst month, quarter, and year ever.
The most recent decline follows news from The Wall Street Journal that Tesla will extend a week-long production shutdown at its Shanghai facility due to an increase in Covid cases among its Chinese workforce.
According to Reuters, Tesla's Shanghai plant will reopen in January for just 17 days, which is a departure from the company's custom. This month, a new wave of Covid infections has devastated Shanghai.
Since reaching a record high in November 2021, Tesla stock has dropped by 73%. In 2022, the stock is down 69%, which is more than twice as much as the Nasdaq. Ford is down 46% and General Motors is down 43% among the big automakers. Tesla has only experienced one other year of decline since its IPO in 2010, an 11% decline in 2016.
Musk is selling large quantities of Tesla stock as Twitter is losing money. Musk reportedly sold an additional 22 million Tesla shares in mid-December, for a total transaction value of about $3.6 billion. On social media earlier this year, Musk informed his countless fans that he had "no further TSLA sales planned" after April 28.
Musk announced on Twitter Spaces on December 22 that he would not sell any stock for 18 to 24 months following his most recent stock sale. Musk claimed in a Twitter exchange with a Tesla shareholder that "people will increasingly move their money out of stocks into cash, causing stocks to drop" as a result of the Federal Reserve raising interest rates.
Investors have not been greatly pacified by his words. According to FactSet, trading volume on Tuesday exceeded 201 million shares, making it the second-highest day of the year after Dec. 22. Since Dec. 13, Tesla's top five trading days by volume have all occurred.
Since it had never previously dropped more than 25% in a single month, Tesla's December decline of 44% represents by far its worst month ever. Additionally, the stock is down 59% in the fourth quarter, worse than the 38% decline it experienced in the second quarter of this year, which was already its worst quarter on record.
Tesla last week increased its discounts for purchasers of its Model 3 and Model Y electric vehicles in North America. These reductions followed incentives the automaker had earlier in the month in mainland China for December vehicle sales.
The used-car market is also under pressure, with used Teslas selling for 17% less on average than they did in July and taking longer to sell than other makes.
At Twitter, meanwhile, Musk has persisted in courting controversy by allowing the continued release of internal messages about the company's past handling of Covid and election-related content and flip-flopping on policy changes. Musk has also welcomed back users who had been banned in the past. Companies have stopped or stopped running paid advertisements on the platform, which has caused Musk to erupt.
Dan Ives of Wedbush Securities stated in a report on Tuesday that the automaker may face more serious issues as a result of Musk's leadership issues.
“At the same time that Tesla is cutting prices and inventory is starting to build globally in face of a likely global recession, Musk is viewed as ‘asleep at the wheel’ from a leadership perspective,” wrote Ives, who maintained his buy recommendation on the stock.
Tesla shareholders want Musk to redouble his efforts to stabilize the business that makes up the lion's share of his fortune. According to Forbes, Musk gave up his position as the richest person in the world to LVMH chair and CEO Bernard Arnault earlier this month as a result of the protracted sell-off.
“I think he really needs to focus on operations, focus on giving us great cars,” said Craig Irwin, an analyst at Roth Capital who has a hold rating on the stock and an $85 price target.

Christopher J. Mitchell

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