[Asia Economy Reporter Jeong Hyunjin] 'Is the love affair between Elon Musk, Tesla CEO, and Wall Street coming to an end?'
On the 3rd (local time), US CNN reported an article titled "Why Elon Musk is No Longer Wall Street's Darling," highlighting Wall Street's growing concerns over Musk's recent actions. Tesla's stock price has been volatile this year, and analysts attribute this to Musk's moves.
According to CNN and Bloomberg, Tesla's stock surged over 1000% within two years starting from early 2020 during the COVID-19 pandemic. However, this year, the stock price has dropped nearly 40% compared to the beginning of the year. The market has been shaken by soaring inflation and interest rate hikes by the US Federal Reserve and other major central banks, compounded by Tesla-specific issues causing the stock price to fluctuate repeatedly.
The biggest factor shaking Tesla's stock this year is the Twitter acquisition deal. In April, Musk announced the acquisition of Twitter for $44 billion. Following this, Tesla's stock rose to $381.8 (approximately 547,600 KRW) on April 4, and the company's market capitalization soared to $1.1 trillion. However, the deal later fell through, and Musk and Twitter are set to begin litigation this month. Since the April peak, the stock has fallen 36.5%.
Additionally, Tesla's recent earnings fell short of expectations. According to Tesla's Q3 earnings report released the previous day, Tesla delivered 343,830 vehicles in Q3. Although this is an increase from the same period last year, it falls short of the market's forecast of 364,660 units. CNBC reported that production disruptions at new plants in Germany and Texas, along with soaring raw material prices, negatively impacted Tesla's performance. On the day of the earnings release, Tesla's stock dropped 8.6% due to these results.
CNN noted that Tesla critics point out that Tesla's stock rose 1900% from fall 2018 to the April peak, and the recent series of problems signal a forthcoming "retreat." However, CNN added that some Wall Street analysts still positively evaluate Tesla, recognizing its strong position in the growing electric vehicle demand.
Daniel Ives, an analyst at Wall Street securities firm Wedbush, said, "Wall Street will be disappointed by the weakened delivery numbers in Q3. We view this not as a weakening of deliveries themselves but as a logistics speed issue." He added that Musk's series of actions poured fuel on the stock price and that the Twitter incident created a nightmare six months for the stock.
Regarding Musk's announcement of the humanoid robot 'Optimus' two days ago, Ives also criticized the timing as inappropriate. He said, "(Although the announcement is) futuristic, it shows a lack of reading the mood," adding, "There is an evaluation that he is not focusing on what he should be focusing on at this point. Holding an AI Day on the 30th of last month and announcing earnings two days later does not look good from Wall Street's perspective."
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