Tesla Stock Hits Lowest Level Since May 2023 Amidst Ongoing Decline
Shares of Tesla, the electric vehicle maker led by Elon Musk, reached their lowest point since May 2023 on Monday, continuing the downward trend that has plagued the company throughout 2024. As Tesla struggles to keep up with its fellow big technology stocks, its stock fell by as much as 6% to $175 before recovering slightly to a 3.7% loss at market close. This decline has resulted in a staggering year-to-date loss of 27%, making Tesla the worst-performing stock on the S&P 500 index.
The decline in Tesla’s stock began in 2024 after the company reported lower-than-expected quarterly profit and revenue, causing a post-earnings plunge. However, the latest selloff coincides with increased controversy surrounding Elon Musk himself. Musk has been advocating for greater power within Tesla and has been using his social media platform, X, to express fringe-right claims. These actions have raised concerns about the ability of Tesla’s board to govern Musk effectively.
The controversy surrounding Musk reached its peak with a report in the Wall Street Journal over the weekend, alleging that Musk and Tesla board members have taken illegal drugs together. Musk has previously denied these claims, stating that his drug tests showed “not even trace quantities” of drugs or alcohol. The allegations outlined in the Journal have further contributed to the negative sentiment surrounding Tesla, leading to Monday’s stock dip.
Wedbush analyst Dan Ives commented on the situation, stating that the allegations in the Journal report have added another “black cloud” over Tesla. He partially attributes Monday’s stock decline to the salacious nature of the report. It is worth noting that Tesla’s stock has experienced a more significant decline this year compared to other companies facing controversies. For instance, Boeing’s shares are down 21% amid safety concerns regarding its commercial airplanes, and Archers-Daniels-Midland, an agricultural giant, has seen a 21% decline due to an alleged accounting fraud probe.
Tesla’s stock performance is closely tied to the actions and statements of Elon Musk. In 2022, Tesla experienced a 65% selloff when Musk sold a substantial portion of his Tesla holdings to fund his purchase of the social media platform now known as X. This year, Tesla’s fortunes have been far worse than those of other tech stocks that saw their valuations soar in 2023. Among the “magnificent seven” tech stocks, only Apple and Tesla have reported negative year-to-date growth, with Apple experiencing a milder 2% decline. Additionally, Tesla’s profits declined by 23% from 2022 to 2023, and analysts predict negative bottom line growth for the company this year.
Despite the decline in Tesla’s stock, Elon Musk remains the world’s second-richest person, with a net worth of $195 billion according to Forbes’ real-time estimates. However, Musk’s wealth has decreased by approximately $55 billion due to Tesla’s stock drop and a Delaware judge’s decision to cancel a $51 billion Tesla stock-based compensation for Musk.
As Tesla continues to face challenges and controversies, investors and industry analysts will closely monitor the company’s performance and the actions of its enigmatic leader, Elon Musk. The future of Tesla remains uncertain, and only time will tell if the company can regain its footing in the electric vehicle market.