Why is Tesla crashing on the stock market?

Last week, Tesla stock value (TSLA) suddenly plunged. The stock price contracted as low as $628, down 49% from its all-time high last November. $30 billion in market capitalization went up in smoke in the space of a few months.

This decline was prompted by analyst Daiwa Jairam Nathan. The expert has lowered its price target for group shares at $800, up from $1,150 before the update. This estimate caused a wave of panic among investors.

Production problems in China

To justify the drop in its target price, the financial expert first points the finger Tesla’s production concerns in China. According to information obtained by Daiwa Jairam Nathan, the Shanghai Gigafactory will not be able to produce as many electric cars as expected. The analyst estimates that the factories will produce 180,000 fewer vehicles compared to last year.

The confinements decreed by the Chinese authorities have permanently paralyzed the country’s production lines. The zero tolerance policy against Covid-19 also blocks the manufacture of several consumer electronics products, such as Apple’s iPhone 14. To overcome the confinement, the Shanghai Gigafactory asked its workers to sleep, eat and relax on site after their 12-hour working day. However, this policy of ” closed circuit “ will not make it possible to recover all the accumulated delay.

Elon Musk sinks Tesla stock

Several other analysts also expect a drop in Tesla stock. Some observers even believe that it is Elon Musk, the founder of Tesla, who is responsible. Dan Ives, analyst at Wedbush, assures that the procrastination of the billionaire in his negotiations with Twitter does not please investors. “The patience of Tesla investors is running out”said Dan Ives, who fears that the next meeting of Twitter shareholders will weigh down the TSLA share price.

After doing everything to buy the social network, Elon Musk now seems determined to lower the purchase price. To achieve this, the entrepreneur argues in particular that Twitter is invaded by bots. He also threatened to cancel the takeover. According to a complaint filed by the shareholders of the platform, Elon Musk deliberately manipulated the stock market to afford Twitter at a lower price.

True to form, Elon Musk did not seem very moved by the risk of recession hanging over the economy. On his Twitter account, the richest man in the world estimated that a “recession is actually a good thing”. The billionaire adds: “It’s been raining money on fools for too long. Some bankruptcies have to happen. Plus, all the Covid stuff at home has got people thinking they don’t really need to work hard. The awakening will be harsh”.

Despite Musk’s escapades and production worries in China, many analysts see Tesla stock as a good investment. Credit Suisse has a price target of 1125 dollars and ensures that “Tesla’s long-term opportunity nevertheless remains intact”. Same story on the side of Jefferies, which always advises to buy Tesla shares. After last week’s sharp decline, the automaker’s stock has gradually risen. It is currently trading around 750 dollars.

Leave a Comment