Seems like Elon Musk has a never-ending loop of problems, as Tesla’s share price is on a downward slope and so is his net worth.
The Tesla stock has tumbled 43% this year through Thursday, lopping $4.9 Billion from the value of Musk’s stake. Musk now ranks 46 on the Bloomberg Billionaires Index, with a net worth of $19.7 Billion – down from 29th at the start of the year.
The rout has erased a total of $7.8 Billion from the stakes of Tesla’s four biggest individual shareholders – Musk, Tencent Holdings Ltd., Saudi Arabia’s Public Investment Fund and Larry Ellison – including $2.7 Billion in May alone.
Wall Street seems to be getting more and more skeptical about Tesla’s methods and guarantees. The company, on the other hand, is firm in its belief that the demand for electric vehicles will grow exponentially.
Per a study by AAA, 20% of Americans want an electric vehicle. Electric vehicles comprise a 10% share of the market share, of which 60% is dominated by Tesla. Tesla hasn’t increased its prices, but the company did see the $7,500 federal rebate for electric vehicles halved at the end of 2018. This was right about the time that Tesla failed to make timely deliveries, which is a major contributor to its stock dip.
While Tesla is right about consumer demand and its pricing power, they should also remember that a successful company takes more than that. Being right isn’t always enough – particularly not in the stock market.
The stock started the year at a price point of $310.12 and at the beginning of this week, it stood at $178.97. Morgan Stanley analysts revised its bear, or worst case forecast for the price of Tesla’s stock from $97 to just $10, saying – “Our revised bear case assumes Tesla misses our current Chinese volume forecast by roughly half to account for the highly volatile trade situation in the region, particularly around areas of technology, which we believe run a high and increasing risk of government/regulatory attention.”
The note also said, “We believe as Tesla’s share price declines, the likelihood of the company potentially seeking alternatives from strategic/industrial/financial partners rises. Based on our discussions with auto companies, suppliers, and technology firms, Tesla’s strategic value and technical competency in both hardware and software remain extremely high if not in a league of its own.”
All analysts and techies will be on the lookout to see how Musk tackles the issue.