Another collapse in Tesla's stock has set the company up for its worst-ever month, quarter, and year, having lost 72.3% of its value since the start of the year. When the New York Stock Exchange closed on Tuesday, Tesla was valued at just $109.52 per share.
The latest loss was provoked by news on Tuesday of dramatic cuts to output next month at the Shanghai Gigafactory, the company’s largest manufacturing plant. The plant is already under an eight-day closure in response to rising COVID-19 cases in the city, with the plant expected to reopen on January 1.
However, a reduced production schedule will now begin on January 3 and run until January 19, followed by a total closure from January 20 until January 31. The Lunar New Year, the biggest holiday on the Chinese calendar, begins on January 22.
Ironically, some of Tesla’s other troubles may help it to weather the storm. The company has a surplus of unsold cars, which it has tried to get rid of by offering buyers a $7,500 discount if they’ll buy and take delivery of one of their most popular electric vehicles, the Model 3 sedan or Model Y sport utility vehicle.
22 December 2022, 16:45 GMT
CEO Elon Musk’s fascination with his newest acquisition, social media giant Twitter, has continued to draw the ire of Tesla investors, who have blamed him for Tesla’s struggles.
“Tesla stock price now reflects the value of having no CEO,” Ross Gerber, head of Gerber Kawasaki Wealth and Investment Management, a Tesla shareholder, fumed on Twitter on December 20. “Great job Tesla BOD [Board of Directors] - Time for a shakeup,” he added.
Gerber then iterated a list of demands of Musk, including knowing when he’d return to Tesla from micromanaging Twitter, and communication about Musk’s massive sales of Tesla stock. Year-to-date, the billionaire industrialist has liquidated about $40 billion of his shares in the company.
The steady decline in Tesla’s stock has made it a favorite target of short-sellers, who Musk sought to court last year amid the “Gamestonk” amateur trading craze. According to a report by S3 Partners last week, traders have made $15 billion in profits betting against Musk and Tesla this year - a trend that went “into overdrive” after Musk’s deal to buy Twitter for $44 billion was announced in April.
Musk has argued the decline in Tesla’s stock has been driven by interest rate increases by the US Federal Reserve, which hiked its Federal Funds Rate considerably since March in an effort to stop record-high inflation.