Tesla shares drop amid concerns over Musk's plans

Company News

by Glenn Dyer

Tesla shares fell to their lowest level in more than a year on Thursday as shareholder unease grows about plans to try to reinstate Elon Musk’s multi-billion share deal, move the company’s domicile to Texas, and abandon a cheap EV (Tesla 2) for the questionable robotaxi idea.

The shares ended down more than 3% at $US149.93 and touched a 52-week low of $US148.70 in trading. That took the fall in the past week to more than 13% and in the year to date to close on 40%.

But more telling is the halving in the share price from the year-high of $US299.29 last July. That has seen the market value slump to well under half a trillion dollars at $US469 billion at Thursday’s close.

Tesla shares have corrected (fallen 10% or more from their most recent high) in the past five trading sessions alone and are deeply in bear territory so far in 2024.

The company’s earnings announcement next week is being closely watched, but many investment groups are wary of the way the company is traveling.

Sending them lower on Thursday was a report from Deutsche Bank, which added to growing concerns over the electric automaker's increasing focus on its autonomous vehicle products when profits are under pressure. Deutsche Bank downgraded the stock to "Hold" and cut its price target to $US123 from $US189.

The report followed a Reuters report earlier this month that Tesla decided to cancel its long-promised inexpensive car that investors hoped would drive growth, while continuing to develop Robotaxis on the same vehicle platform.

Musk confirmed that in a tweet on his X platform (after denying it in a tweet on his X platform) and said the robotaxi would be unveiled on August 8.

The Deutsche report said cracking the code for full driverless autonomy represents a significant technological, regulatory, and operational challenge.

"The delay of Model 2 efforts creates the risk of no new vehicle in Tesla's consumer lineup for the foreseeable future, which would put downward pressure on its volume and pricing for many more years," Deutsche Bank analyst Emmanuel Rosner said.

As profitability takes a hit from price cuts to maintain demand for its electric vehicles around the world - but especially in the US and China, Tesla earlier this week laid off more than 10% of its global workforce and then revealed it is trying to revive Musk's huge pay deal from 2018.

The company has asked its shareholders to reaffirm their approval of Musk's $US56 billion pay that was set in 2018, but was rejected by a Delaware judge in January. That package has fallen in value with the share price and is now worth less than $US47 billion.

That fall has been the responsibility of the lackluster and volatile management by Musk of Tesla, X, and his constant involvement in America’s endless culture wars.

Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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