Tesla Shares Head for Worst Year Ever as Elon Musk Focuses on Twitter

The company has lost roughly 70% of its value since the stock hit an all-time high in November 2021. Global economic uncertainty is deepening, and consumers have a growing array of other electric vehicles to choose from, prompting concern on Wall Street that Tesla might need to sacrifice its level of profitability to maintain its pace of growth.

Tesla’s stock-price decline has outpaced that of the broader market, as well as many of its rivals, though some electric-vehicle startups have fared worse.

Riding high

Tesla entered 2022 from a position of strength, buoyed by better-than-expected results throughout the Covid-19 pandemic and strong vehicle pricing.

The company has delivered more than a dozen consecutive profitable quarters, helping the electric-vehicle maker that once had a record of being starved for cash in building up a roughly $20 billion cushion, rivaling that of some legacy car manufacturers.

Wall Street jitters

Wall Street tempered its expectations for Tesla’s growth this year after an extended Covid-related shutdown of the company’s largest assembly plant, located in Shanghai. 

Now rising interest rates and global economic uncertainty have stoked concern that demand for new vehicles might be weakening. 

Analyst estimates for Tesla’s 2022 vehicle deliveries, monthly average

Delivery estimates

fall below where they

started the year

Delivery estimates

fall below where they

started the year

Delivery estimates

fall below where they

started the year

Delivery estimates

fall below where they

started the year

Delivery estimates

fall below where they

started the year

Readily available

As recently as earlier this year, customers faced monthslong waits for many Tesla models. No longer. 

Tesla cut prices in China this fall and is offering various incentives to move cars off the lot and into customers’ driveways before the new year. In the U.S., Tesla is offering buyers of certain EVs a $7,500 credit and 10,000 miles of free fast-charging if they agree to take delivery this month.

Lowered expectations

Tesla, which didn’t respond to a request for comment, lowered its full-year growth expectations in October, with Chief Financial Officer

Zach Kirkhorn

saying the company expected to finish the year just shy of its original 2022 goal of increasing deliveries by 50%. The company delivered around 936,000 vehicles to customers in 2021. It would need to hand over more than 1.4 million this year to achieve its original target. 

Mr. Musk said this month, “There is stormy weather ahead, but then there is going to be sunshine thereafter.”

Tesla’s vehicle deliveries, quarterly

Needed to hit goal of 50% growth in ’22

Needed to hit goal of 50% growth in ’22

Needed to hit goal of 50% growth in ’22

Needed to hit 50% growth in ’22

Needed to hit 50% growth in ’22

More alternatives

Drivers shopping for an electric vehicle have more options to choose from. Tesla continues to dominate in the U.S., but rivals such as

Ford Motor Co.

and

Rivian Automotive Inc.

are gaining traction.

In China,

Warren Buffett

-backed

BYD Co.

is widening its lead over Tesla.

Selling spree

Mr. Musk has sold more than $39 billion of Tesla stock since the company’s market capitalization peaked. He has pointed to his Twitter involvement in explaining some of those sales. The billionaire bought the social-media company in a deal valued at $44 billion in October, with Twitter taking on roughly $13 billion in debt in the process. He said he wouldn’t sell more Tesla shares through next year.

Mr. Musk’s sales have rankled investors, some of whom have called on the company to repurchase its own shares for the first time. Mr. Musk said in October that a meaningful buyback was likely, floating the idea of repurchasing $5 billion to $10 billion of shares in 2023. He more recently cautioned that it would be unwise to buy back shares and then end up in a severe recession.

Cumulative value of Elon Musk’s Tesla stock sales since shares hit an all-time high on Nov. 4, 2021

Tesla share price

hits record high

Twitter accepts Musk’s

acquisition bid

Musk completes

Twitter takeover

$16.4 billion

sold between

Nov. 8 – Dec. 28

Musk also donated

$5.7 billion in shares

Tesla share price

hits record high

Twitter accepts Musk’s

acquisition bid

Musk completes

Twitter takeover

$16.4 billion

sold between

Nov. 8 – Dec. 28

Musk also donated

$5.7 billion in shares

Tesla share price

hits record high

Twitter accepts Musk’s

acquisition bid

Musk completes

Twitter takeover

$16.4 billion

sold between

Nov. 8 – Dec. 28

Musk also donated

$5.7 billion in shares

Tesla share

price hits

record high

Twitter accepts

Musk’s

acquisition bid

Musk completes

Twitter takeover

$16.4 billion

sold between

Nov. 8 –Dec. 28

Musk also donated

$5.7 billion in shares

Tesla share

price hits

record high

Twitter accepts

Musk’s

acquisition bid

$16.4B sold

between

Nov. 8 and

Dec. 28

—Selina Cheng contributed to this article.

Write to Rebecca Elliott at [email protected] and Nate Rattner at [email protected]