Tesla stock is heading to end its worst year ever, apparently discounting a CEO, Elon Musk, increasingly distracted by the new Twitter toy. The shares of the electric car giant founded and managed by Musk are about to end 2022 with a drop of -62%.
In the face of Elon Musk himself who has just asked with a poll on Twitter whether it is worth continuing to deal more with social networks than with cars, it is worth retracing a bit of the history of this title.
Meanwhile, How far has TSLA stock made from its Wall Street debut to date?
On the Stock Exchange numbers are more important than talk.
Tesla has landed on the stock exchange in June 2010, at an offering price of $17 per share.
That price was promising, as it was well above the range indicated previously, between $14 and $16, confirming theinitial enthusiasm of investors for a company that would revolutionize the world car industry.
Since then, the stock has jumped to such high values as to compel top management to opt for two stock splits, in order to make the shares more accessible to retail investors.
Tesla: spectacular rally since IPO 2010
The first share split of Tesla occurred in August 2020 for a ratio of 5 to 1. The second, of 3 to 1, was launched in August of this year .
One cannot ignore these events in order to understand Tesla’s trend:
it can be said that, by carrying out the necessary calculations that take into account these two share splits, Tesla IPO price of $17 expected to be revised down to $1.13.
This means that whoever had bought the share more than 10 years ago would have collected a gain of as much as +13.255% until last December 21st, when the stock was hovering around $150 (the recent violent falls led it to capitulate up to $123).
In dollar terms, who bet $10,000 on Tesla in June 2010 would now hold a valued holding over $1.32 million.
Which again means, that TSLA stock has grown at a compound annual rate of +48%nearly five times higher than the return generated by Wall Street’s benchmark stock index, i.e. the S&P 500.
TSLA: Is it really the Musk-Twitter saga to blame?
But then, we are sure that the fault of the crash of Tesla this year is to be charged to the Twitter deal?
Not everyone is convinced, as reported by an article on CNN with the following title: “Elon Musk’s Twitter obsession isn’t the core reason for Tesla stock’s plunge”. Or: “Elon Musk’s obsession with Twitter isn’t the main reason for Tesla’s stock crash.”
The reason is in the giant’s business trend, i.e. in the Tesla’s revenue and earnings trends whose outlook, I fear investors and strategists, could worsen.
One sign of declining demand for Tesla cars is that the company has offered two discounts to those who buy certain vehicles before the end of the year. And the point is that this discount has also doubled, since, initially amounting to $3,750 in early December, last Thursday it jumped to $7,500.
“It is clear that Tesla is starting to see cracks forming in demand in China and the United States, at a time when competition in the EV sector is increasing”. commented Dan Ives, an analyst in the tech division of Wedbush Securities, known for being historically bullish on Tesla, who announced last Friday that he had cut the target on the title from 250 to 175 dollars.
Obviously, the person concerned Elon Musk gives another interpretation to the drop in the title of his jewel: a lot, in his opinion it’s not Twitter’s fault.
But for the former child prodigy of the global auto industry, the fault isn’t even anything to do with the fundamentals of his Tesla. If anything the defendant is Jerome Powell’s Fed who, according to the tycoon, in his fight against inflation is exaggerating in raising rates on fed funds.
“I keep saying the Fed is crazy, since the data I’m monitoring indicates that we are already in deflation“, wrote Musk on Twitter days ago.
However, someone points out that the numbers tell a different story.
Tesla stock has dropped 59% since the announcement of Musk’s plans to buy TwitterApril 2022. Over that period, Ford is down 26%, GM is down 12%, and the S&P 500 is down 14%.
It is also worth mentioning that Musk has sold billions of dollars worth of Tesla stock to fund the Twitter deal, including a $3.6 billion sale earlier this month, which led many to see in Tesla a sort of ATM to finance Twitter.
Whatever the real reason for Tesla’s crash, the point is that never before have the prices of the car giant suffered such a significant decline as in 2022.
And among the biggest losers there is also theshareholder BlackRock.