Tesla Dangerously Loses Its Luster
In minds and numbers, Tesla remains the star of the automotive industry.
The market capitalization of Elon Musk's group is above $532 billion at last check. Toyota (TM) - Get Free Report, General Motors (GM) - Get Free Report, Ford (F) - Get Free Report and Volkswagen (VWAGY) - Get Free Report are far behind with market values $199 billion, $57 billion, $56.5 billion and nearly $100 billion, respectively.
The manufacturer continues to collect trophies and consolidate its position as the world leader in the electric-vehicle market. For example, the group accounted for two-thirds of new EV registrations between January and August in the U.S., according to data from Experian.
Two of its models, the Model Y SUV and the Model 3 entry-level sedan, occupy the first two places on the list of the bestselling electric vehicles on the American market with, respectively, 134,978 units and 123,634 units sold. Ford's Mach-E SUV comes third with 25,596 units sold.
And the top 5 are completed by the Tesla Model S and the Model X. Sure, the competition is gaining market share, but the Austin automaker is still the giant of the industry.
$580 Billion of Market Value Wiped Out
At the same time, in recent months Tesla's star has been fading. Once a daily star on the New York Stock Exchange and a boldface name on social media, Tesla seems to have almost disappeared, except in the context of its stock-market slump.
Tesla stock is down 52% this year, translating to a $580 billion drop in market capitalization. By comparison, GM shares have lost 32% of their value this year and Ford shares are down 31%. In the past, it was often the opposite: Tesla performed much better than its rivals and compatriots.
Having lost half its market value, the company was overtaken by Berkshire Hathaway (BRK.A) - Get Free Report, (BRK.B) - Get Free Report the holding company of legendary investor Warren Buffett, in the ranking of the largest companies on that basis.
Tesla is now the world's seventh largest company, with a market capitalization of $534 billion, behind Berkshire, sixth with $690 billion. The top 5 are unchanged: Apple (AAPL) - Get Free Report, Saudi Aramco, Microsoft (MSFT) - Get Free Report, Alphabet (GOOGL) - Get Free Report and Amazon (AMZN) - Get Free Report.
The fundamentals of the company are, however, very solid. For the third quarter Tesla posted adjusted earnings before interest, taxes, depreciation and amortization of almost $5 billion, up 55% year-over-year, while revenue jumped 56% to $21.5 billion.
Tesla delivered 907,573 vehicles in the first nine months of 2022, up 45% year-over-year, and produced 927,910 cars, up nearly 49%.
The company also has a clear roadmap: Tesla on Dec. 1 is to deliver its first Semi truck to PepsiCo (PEP) - Get Free Report and in mid-2023 will start producing the highly anticipated Cybertruck. Those are to be followed in 2024 by the new-generation Roadster and the first model in its line of autonomous vehicles. The company also plans to produce Optimus, its humanoid robot, beginning in 2023.
Blame Twitter
Covid-19's resurgence in China is causing concern that production at Tesla's Shanghai factory might be interrupted. But that's not the key factor in the stock's drop, which has been going on for quite some time.
Analysts and investors attribute the tumble in the stock to CEO Elon Musk's acquisition of the social network Twitter.
"$TSLA continues to underperform (TSLA -20% vs [Nasdaq 100 Index] +3%) since Elon completed his purchase of TWTR on 10/28," Tesla investor Gary Black said. "This reflects investors’ concern that TWTR’s loss in ad [revenues] will require more capital from @elonmusk and continued uncertainty about China sales and pricing."
Since completing the purchase of the platform for $44 billion on Oct. 27, the billionaire has spent most of his time talking about Twitter. The rare few times he's mentioned Tesla's name come when he's asked a question on social media.
Musk is the craftsman, architect and lead ambassador for Tesla. Prior to Twitter, the tech tycoon promoted the EV company almost on a daily basis, which helped keep the brand in conversation.
Since Twitter, the automaker now appears less of a priority for Musk, who is trying to find sources of revenue to turn the microblogging platform profitable.
He is currently devoting all his energy to it -- after he caused chaos there less than a month after taking the helm. He laid off nearly 70% of the firm's 7,500 employees and reactivated the account of former President Donald Trump. This latest decision worries advertisers, who do not want to have their brands associated with racist and hateful language as well as misinformation.
The serial entrepreneur recently admitted that since taking over Twitter, he hardly sleeps.
"I have too much work on my plate, that's for sure," Musk said on Nov. 14 during an appearance at B20 Indonesia, a business conference running alongside the G20 summit in Bali. "I'm working the absolute most that I can work -- morning to night, seven days a week."
A few days earlier Musk also told attendees at the 29th annual Baron Investment Conference that his workload has increased from 70 hours a week to 120.
"But, I think once Twitter is set on the right path, it will be much easier to manage than SpaceX or Tesla."
Black Friday Sale
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