The pain for Tesla investors is unending as a rough week comes to a close.
Tesla shares slipped another 4% today, dropping to multi-year lows and giving the stock a nearly 16% drop for the week, as of midday trading.
Tesla investors have been blaming CEO Elon Musk for the near term weakness in the stock, with Twitter the main source of the criticisms. Long-term shareholders see him as distracted from running Tesla and abandoning the company during a critical period, and bringing downward pressure on the stock with recent share sales.
Gary Black, a prominent long-term Tesla stockholder, believes today’s weakness might be due to more selling:
Is @elonmusk selling more $TSLA shares today on the last day before the 4Q trading window closes? Possibly. Seems unbelievable to me Elon selling here at 22x my 2023 EPS of $7+ (all time low 28.2x Jan 2019) to pay down $TWTR debt. Recession forces receding as inflation retreats. pic.twitter.com/TpIuafSgfV
— Gary Black (@garyblack00) December 16, 2022
If true, this comes after a filing this week in which Musk disclosed that he sold 22 million shares of Tesla stock starting on Monday and concluding on Wednesday. The value of the sale was around $3.6 billion.
This lead the Wall Street analyst community to weigh in on the moves, which come at a bad time for Tesla stockholders.
“The Twitter nightmare continues as Musk uses Tesla as his own ATM machine to keep funding the red ink at Twitter which gets worse by the day as more advertisers flee the platform with controversy [increasingly] driven by Musk,” Wedbush’s Dan Ives wrote in a note yesterday. “In late April Musk said he was done selling Tesla stock, instead the exact opposite has happened and put massive pressure on Tesla shares which have significantly underperformed the market since Musk took over Twitter in late October.”
Goldman’s Mark Delaney echoed a sentiment that has been shouted loud by Tesla investors this week - Musk must return back to Tesla and focus the company at the task at hand, continuing the global replacement of traditional gas-powered vehicles with EVs.
Tesla needs to shift back the consumer focus of the company to its “core attributes of sustainability and technology,” Delaney said, in order to exceed its long-term expectations for Tesla.
Despite the near-term negative sentiment with Tesla in the analyst community, one analyst sees Tesla as a buying opportunity.
“At current prices, we view Tesla shares as undervalued, trading in 4-star territory,” Morningstar analyst Seth Goldstein wrote in a note yesterday.
Despite the economic headwinds Tesla is facing in China and the E.U., Goldstein believes the IRA federal subsidies for EVs will “benefit” Tesla in the U.S. starting next year. “Given [the IRA effect] and the company's relatively small volume of 1.2 million deliveries on a trailing 12-month basis, there is still likely to be strong demand even in an economic slowdown. We continue to forecast that Tesla will deliver nearly 1.4 million and 2.1 million vehicles in 2022 and 2023, respectively."
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Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
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