Tesla crash continues as Musk doubles down on strategy
shares extended their extraordinary slump Monday and look set to open at the lowest level in more than 15 months, as investors brace for what could be a difficult firstquarter earnings report later this week.
Tesla, which has shed nearly $350 billion in market value this year, is suffering the secondlongest drawdown of its share price since it went public in 2010. The slump has lopped more than $760 billion from its market value since the November 2021 peak.
The drop has been triggered in part by aggressive EV price cuts, narrowing profit margins and a strategy shift that looks to prioritize self-driving technologies over traditional car production in the coming years.
Elon Musk is also attempting to win shareholder support for a massive $55.8 billion pay package, first agreed in 2018 but rejected by the Delaware Chancery Court last year, that would see him reclaim a big portion of the ownership stake that he surrendered to raise cash for his $44 billion purchase of Twitter in 2022.
Musk hasn’t pinned his future with the group on a successful appeal of the pay award, which was deemed “an unfathomable sum” by Chancery Judge Kathaleen McCorTesla mick, but he has said that he’ll pursue his artificialintelligence and robotics ambitions outside the Tesla structure if he isn’t able to secure 25% of the company’s stock.
His 13% stake makes him Tesla’s biggest and most influential shareholder and he carries the full support of the board.
Still, the next few months could prove crucial for both the group’s near-term performance as well as Musk’s long-term commitment. He’s lobbying shareholders to approve his 2018 pay deal, which he hopes will buttress his Delaware court appeal, and is preparing for the long-delayed unveiling of a Tesla robotaxi that could define the group’s future.
A least a portion of the definition was evident in last week’s decision to execute the largest round of layoffs in company history. Tesla sacked as many as 14,000, or 10%, of its global staffers in what Musk called preparation for “our next phase of growth.”
Musk has long argued that Tesla is a more than a carmaker. Rather, he sees it as a collective of techfocused startups that he sees as pivotal to his broader ambition of a creating a world packed with self-driving cars powered by his company’s AI-led technologies.
Morgan Stanley analyst Adam Jonas has said Tesla’s DoJo supercomputer, which is powered by AI technologies, could add more than $500 million to Tesla’s market value “through a faster adoption rate in mobility (robotaxis) and network services (software as a service)” over the coming years.
That could be why markets are so keenly focused on both the details of its first-quarter earnings report, slated for after the close of trading on April 23, as well as Musk’s remarks to investors and analysts on the conference call that follows.
Wedbush analyst Dan Ives, who carries an outperform rating and a $300 price target on Tesla, says the April 23 conference call will be “one of the most important moments in the company’s history.”
“The miscalculation of demand erosion in China has been a gut punch to the bull thesis, the Model 2 vs. Robotaxi debate has taken on a life of its own, major layoff including key assets for Tesla, and a global EV landscape that has turned Tesla from a Cinderella story to a horror show in the near term,” he added.