Tesla shares posted their worst week since the pandemic began in March 2020, losing $85 billion in market value amid investor doubts about the electric car maker’s prospects as CEO Elon Musk runs Twitter.
Tesla shares closed at their lowest point in more than two years on Friday, pushing its market capitalization below $400 billion. The stock has lost 18 percent this week.
Tesla was worth $1.2 trillion at the beginning of the year. The drop in value of more than $800 billion is equal to the combined current market capitalization of more than 80 of the smallest companies in the S&P 500 index, according to S&P Global Market Intelligence. The automaker’s market capitalization has fallen below that of ExxonMobil, a company that relies on fuel for internal combustion cars.
Pressure on Tesla’s stock has intensified in recent months due to Musk’s heavy selling to finance his $44 billion takeover of Twitter, as well as growing concerns about the outlook for its car sales.
Tesla shares fell 9 percent on Thursday after the company said it would offer a $7,500 discount to U.S. consumers on two of its best-selling models, an announcement that sparked concerns about consumer demand.
Later that day, Musk promised via Twitter that he would not sell any more of his Tesla stake for at least a year. He also said he was open to the idea of a buyout.
“I’m not going to sell the stock until, I don’t know, probably two years from now.” “Definitely not next year under any circumstances, and probably not the year after,” he said.
Musk, who recently lost his position as the world’s richest man, has sold nearly $23 billion in stock since announcing his $44 billion purchase of Twitter. Despite promising in April to stop doing so, he has since sold the shares on three occasions, most recently last week. The divestment has angered major investors who believe the entrepreneur has left the automaker to focus on his new acquisition.
Musk vowed to step down as CEO of the social media platform once he finds a replacement following a poll of Twitter users on the matter on Sunday.
Wedbush Securities technology analyst Dan Ives cut his price target on the stock from $250 to $175 on Friday, but maintained an “outperform” rating. Tesla shares fell 1.8 percent to $123.15 on Friday.
Ives tweeted: “We believe if Musk refocuses on Tesla, actually stops selling stock (walk the walk, not just the talk), Board initiates buyback, and 2023 guidance is conservative [fourth-quarter] call in January, then this stock has bottomed out in our opinion and it works from here.”
Of the 41 analysts covering Tesla tracked by Refinitiv, four have a “sell” rating on the stock.
The drama surrounding Musk has helped make Tesla the most profitable U.S. company to short this year, delivering a paper profit of just over $15 billion in 2022, according to S3, a New York-based specialty consultancy. Short sellers aim to profit from falling stock prices.
Since August, short sellers have increased their total short positions in Tesla by about a third to 81.8 million shares, or about 3 percent of the automaker’s outstanding shares, in a bet worth about $11.3 billion, S3 calculated.