- Tesla shares dropped 11% on Tuesday and are now down 44% in December
- Investors are bailing on the stock as challenges mount for Tesla abroad and at home, and as Elon Musk continues to spend an outsize amount of time at Twitter.
- Multiple outlets reported fresh challenges for Tesla production in mainland China, as the automaker struggles to attract buyers in China and in North America.
Tesla's sell-off intensified on Tuesday, with the stock closing down 11%. Elon Musk's electric car company is days away from closing out its worst month, quarter and year on record and has moved past Meta to become the worst-performing stock in 2022 among the most valuable tech companies.
The latest drop comes after The Wall Street Journal reported that Tesla will continue a weeklong production halt at its Shanghai facility, facing a fresh onslaught of Covid cases within its Chinese workforce.
Reuters reported that when Tesla's Shanghai plant reopens in January, it will do so for just 17 days, in a break from Tesla's established practices. Shanghai has been battered by a fresh wave of Covid infections this month.
Tesla shares have fallen 73% from their record high in November 2021. The stock is down 69% in 2022, more than double the decline in the Nasdaq. Among major carmakers, Ford is down 46% and General Motors has fallen 43%. Since its IPO in 2010, Tesla has only fallen in one other year, an 11% drop in 2016.
Twitter is bleeding cash, and Musk is selling Tesla stock in big chunks. According to filings in mid-December, Musk sold about 22 million more shares of Tesla, which were worth around $3.6 billion, Earlier this year, Musk told his millions of followers on social media that he had "no further TSLA sales planned" after April 28.
After his latest stock sale, Musk said on Twitter Spaces on Dec. 22 that he would not be selling any stock for 18 to 24 months. In a debate with a Tesla shareholder, Musk pinned Tesla's declining share price on Federal Reserve rate hikes, tweeting that "people will increasingly move their money out of stocks into cash, thus causing stocks to drop."
His words have done little to placate investors. Trading volume crossed 201 million shares on Tuesday, the second-highest mark for the year, according to FactSet, behind Dec. 22. Tesla's top five trading days by volume have all been since Dec. 13.
For the month of December, Tesla has plunged 44%, by far its worst month ever, as it had never fallen more than 25% in a single month. And in the fourth quarter, the stock is down 59%, worse than its 38% drop in the second quarter of this year, which had been its worst period on record.
Last week, Tesla expanded discounts in North America for buyers of Model 3 and Model Y electric vehicles. Those discounts came after the automaker offered incentives in mainland China for December auto sales earlier this month.
Pressure is also mounting in the used-car market, with the average price for a used Tesla dropping 17% from July highs, and with used Teslas lingering longer than other makes before being resold.
Meanwhile, at Twitter, Musk has continued to flirt with controversy, welcoming back previously banned users, enabling the continued releases of internal messages related to the company's past handling of Covid and election-related content, and flip-flopping on policy changes.
Companies have paused or suspended paid advertising on the platform, prompting outbursts from Musk.
Wedbush Securities' Dan Ives wrote in a report on Tuesday that Musk's leadership issues posed potentially deeper problems for the automaker.
"At the same time that Tesla is cutting prices and inventory is starting to build globally in face of a likely global recession, Musk is viewed as 'asleep at the wheel' from a leadership perspective," wrote Ives, who maintained his buy recommendation on the stock.
Tesla investors want Musk to refocus his efforts on stabilizing the company that accounts for the vast majority of his wealth. Because of the extended sell-off, Musk ceded his title as the world's richest person earlier this month to LVMH chair and CEO Bernard Arnault, according to Forbes.
"I think he really needs to focus on operations, focus on giving us great cars," said Craig Irwin, an analyst at Roth Capital who has a hold rating on the stock and an $85 price target.
Tesla closed on Tuesday at $109.10. The shares were set for greater losses Wednesday, with Tesla falling more than 3.5% in U.S. premarket trading.
— CNBC's Lora Kolodny contributed to this report.