Elon Musk, the world’s richest person, is facing a series of challenges as Tesla’s value takes a significant hit. The electric vehicle (EV) maker has seen its valuation drop by approximately $188 billion this year, causing concern among investors. This decline in value can be attributed to worries about China’s fragile economy and a potential slowdown in global EV sales.
Tesla’s stock price has been on a downward trend since the beginning of the year, with shares down nearly 23%. Analysts believe that the market is trying to factor in growth rates for the next year and may be assuming that slowing EV sales will translate to slowing Tesla sales. Seth Goldstein, an equity strategist for Morningstar, stated, “Because Tesla is such a high-growth stock, even small revisions downward can have a large impact on its valuation.”
In addition to the decline in stock price, Tesla has also lost its position as the world’s biggest EV maker to China’s BYD. Shares in BYD have also experienced a decline of about 12% this year. As a result, Tesla’s valuation has been reduced by $188 billion, leaving it worth just over $600 billion.
Analysts have expressed concerns about Tesla’s overvaluation, with Roth MKM analyst Craig Irwin deeming it “egregiously overvalued” and setting a target price of $85 for its shares. Despite the recent decline, Tesla’s shares are still up almost 900% over the past five years.
The drop in Tesla’s value has had a significant impact on Elon Musk’s personal wealth. As his wealth is closely tied to his 21% stake in Tesla, Musk has seen his fortune decrease by approximately $21 billion this year. However, he still remains worth $208 billion.
In addition to Tesla’s struggles, Musk has faced challenges at X, the social media company formerly known as Twitter. Advertisers have started to pull away from the platform due to Musk’s controversial comments and his confrontational approach with big-name sponsors. Ad spending on X dropped by 54% in 2023, leaving the platform struggling to sell advertising slots.
Musk’s other company, SpaceX, has also faced difficulties. It has been involved in a dispute with Ukraine over Russia’s alleged use of its Starlink satellite internet terminals. While Musk has denied the accusations, Ukraine has claimed that it is working with SpaceX to disable Russia’s access to Starlink.
Furthermore, SpaceX faced a setback when it had to delay a launch, hampering its moon-landing efforts. Houston firm Intuitive Machines beat SpaceX to the punch by successfully landing its uncrewed Odysseus lander on the lunar surface, becoming the first commercial spacecraft to do so.
Overall, Elon Musk is currently grappling with various challenges across his companies. The decline in Tesla’s value, the advertiser exodus at X, and the controversies surrounding SpaceX have put Musk’s business ventures under scrutiny. However, it remains to be seen how he will navigate these obstacles and steer his companies back on track.