Tesla Stock Rout Wakes Up Elon Musk

The billionaire had neglected the electric vehicle manufacturer in recent months, disappointing many retail investors.

This is a real relief for Tesla investors. 

For several months now, they have been wondering whether Elon Musk, the CEO and big boss of the electric vehicle manufacturer, will be able to focus on the company. 

The billionaire is Tesla's architect. His involvement is enough to reassure those who have invested in the company because they believe in his vision and his promises to revolutionize the automotive industry. 

The Techno King, as he's known at Tesla  (TSLA) - Get Free Report, has changed the way Americans, and consumers in general, view the automobile. He turned the car into a living room on four wheels.

He promised that soon Tesla cars will be able to drive themselves. The latest versions of Full Self-driving (FSD), Tesla's advanced driver assistance system, allow the car to perform many maneuvers on its own, but we are still far from autonomous driving, even if Musk promises a fleet of autonomous Tesla vehicles in 2024. 

With the upcoming arrival of the Cybertruck in mid-2023, the serial entrepreneur will have challenged all the facets of the pickup/truck. This futuristic vehicle is one of the most anticipated cars of the last decades.

Tesla Stock Rout

Musk, repeated, on September 30, during the group's second AI Day, that Tesla was more than a vehicle maker. It is a technological enterprise whose goal is to transform civilization as we know it today. 

"We really wanted to show the depth and breadth of Tesla and artificial intelligence, computer hardware, robotics actuators and, and try to really shift the perception of the company away from you know...a lot of people think we're like, just a car company or we make cool cars, whatever," Musk said. "But most people have no idea that Tesla is arguably the leader in real world AI, hardware and software, and that we're building what is arguably the first, the most radical computer architecture since the Cray-1 supercomputer.”

"And I think if you're interested in developing some of the most advanced technology in the world, that's going to really affect the world in a positive way, Tesla is the place to be," Musk added.

The problem is that, to realize his vision, Musk must be present at the helm of Tesla. Without him, many investors doubt that Tesla can do it. So there is a sort of Musk premium in the Tesla stock price.

It's no surprise then, that Tesla’s stock has plummeted in recent months, after Musk focused on social network Twitter, which he acquired for a whopping $44 billion after a six-month backbreaking battle that put Tesla in the background. Tesla's stock is down almost 51% in 2022. 

But the real decline came after Twitter's takeover bid on April 25. From January 1 to April 22, the last trading session before Musk's offer was announced, Tesla stock had lost only 5% of its value. But since then it's been a real ordeal: Tesla stock is down 48.2% since, which represents a drop in market value of around $510 billion. The group, which was also the world's sixth-largest company by market value, has been overtaken by Berkshire Hathaway  (BRK.A) - Get Free Report, the holding company of legendary investor Warren Buffett.

Seeing their investments melt day by day, many retail investors have not hesitated in recent weeks to beg Musk to take an interest again in Tesla, once at the center of attention of the tech mogul. The billionaire ignored these calls for many months. 

But it seems that the moment has come, since Musk, for the first time in months, posted several messages on December 8 about Tesla. 

"Tesla Team has done incredibly well, despite extremely difficult times. Could not be more proud of them," Musk posted on Twitter on December 8, as analysts and fans questioned the demand for Tesla vehicles in China, a crucial market.

'Macro Conditions'

Then he gave an explanation for the fall in the Tesla stock.

"Macro conditions are difficult," the billionaire posted on Twitter on December 8, as an explanation to Tesla's stock decline. "Energy in Europe, real estate in China & crazy Fed rates in USA."

A little later, he tweeted that he was staying on the board of Tesla and SpaceX, his space shuttle company, but had good teams in place at each of the companies. Basically, Musk is delegating and not micromanaging, as a way to respond directly to critics who feel he has abandoned Tesla somewhat.

"I continue to oversee both Tesla & SpaceX, but the teams there are so good that often little is needed from me."

He finally commented on a thread from tech analyst Pierre Ferragu on Tesla's current setbacks: "Economic downturn: Could reduce delivery growth next year by 10-15pts, from the ~50% level of today, and cost a few points of a gross margin standing at ~30% today, while it would crush and bring to near bankruptcy incumbent manufacturers," Ferragu said. "A competitive accelerator for $TSLA !"

"When there are macroeconomic risks, it is generally wise to avoid using margin loans on any company, as stocks may move in ways that are decoupled from their long-term potential," Musk said, suggesting that he regrets pledging Tesla shares as collateral to finance his Twitter deal.

Granted, Musk tweeted more about Twitter that day than the four messages he posted about Tesla, but for the automaker's investors that's already a big change from the past few months.

The billionaire had indeed limited his tweets about Tesla in recent months to the occasional message confirming the release date of the latest version of FSD, or confirming the date of an event such as AI Day. 

There are also one or two response messages to investors asking about the share buyback program. Other than that, Musk was no longer doing what he had in the past, publicizing Tesla's achievements, instead of notifying about things to come.