Tesla stock closed the week in the red, which has seen Elon Musk posting record daily losses of $11.3 billion, raising questions on whether owning the stock is worth it.
Elon Musk, the richest person in the world, has a net worth of $198 billion.
The 51-year-old billionaire, who was born in South Africa, has seen his fortune this year alone decline by around $72.5 billion nearly twice the market value of BMW ($47 billion)
With $198 billion in net wealth, he could purchase 2.16 billion barrels of crude oil or 120 million troy ounces of gold. According to a regulatory filing from August 2022, Musk owns around 15% of Tesla.
In what turned out to be a generally bad trading session for the stock market, shares of Tesla fell significantly on Friday to close at $204.99 under intense selling pressure.
The decline in the stock ended a two-day gaining streak. Tesla Inc. is currently trading below its November 4th 52-week high ($414.50).
When compared to some of its competitors, the stock underperformed. General Motors Co. GM, +0.40% increased to $32.89 on Friday, while Toyota Motor Corp. ADR TM, -1.66%, Honda Motor Co. Ltd. ADR HMC, -1.26%, and General Motors Co.
The large stock market gain on Thursday caught investors off guard, but Friday brought more disappointment and realism.
Recent macros included the business’s brand-new Gigafactory facility in Germany; according to a press report, the corporation might not be able to start mass-producing electric battery cells there until 2024 due to issues with a production process. Tesla has great expectations for the facility, and as it grows, its yearly production might approach 500,000 vehicles.
As Tesla works to streamline a supply chain and distribution system that is already experiencing strain, it will be helpful for the site to be able to create all of its essential components in-house rather than relying on other Gigafactories around the globe.
A day after completing a historic turnaround rebound as investors processed inflation predictions, equities declined on Friday, wrapping off a choppy trading week.
The industry leader in electric vehicles has provided investors with enormous gains since 2019, and it even temporarily reached the trillion-dollar mark as it expanded its production capacity to try to keep up with the high demand for its EVs from customers.
Tesla stock was able to evade the harshest effects of the Nasdaq bear market for the majority of 2022, holding up quite well even as other large-cap players in the index saw more severe declines. The weakness of Tesla shares has now surfaced, though, as they have lost about a third of their value in less than a month.
Some investors questioned whether now could be the right moment to take a second look at Tesla after it concluded Friday’s session at less than half its closing high from Nov. 4, 2021.
What to expect
- Next week, when the electric car marker releases its most recent financial numbers, investors will learn what effect, if any, the discrepancy between its third-quarter production and delivery totals will have on its income statement.
- Tesla has attributed the discrepancy between its production and delivery numbers to logistical problems. It might be possible to explain the stock’s recent falls if those problems end up being expensive enough to significantly impact the business’s profits — even briefly.
- S&P Global Ratings has formally raised Tesla’s (TSLA) long-term credit rating to investment grade.
The automaker now has its first investment grade rating from S&P Global Ratings, which increased Tesla’s long-term credit rating from BB+ to BBB. - The electric vehicle car marker was mentioned by the rating agency in its justification for the upgrading as follows:
- Due to Tesla’s continued market leadership in electric vehicles (EVs), strong manufacturing efficiency that supports strong EBITDA margins, and sustained positive free operating cash flow (FOCF), above our previously established upside triggers, we now have a more positive view of Tesla’s credit profile.
- The Nasdaq listed company has beaten S&P Global Ratings’ estimates on a number of indicators, the company acknowledged.
- The business is confident that Tesla will continue to maintain low debt levels while generating significant profits:
- The stable view reflects our expectation that Tesla will keep its debt levels low while maintaining its strong market share, profitability, and good liquidity despite a faltering economy and an environment that is becoming more competitive for EVs.
- Elon Musk stoked rumors that Tesla would shortly make its first-ever stock buyback announcement. Musk replied “Noted” to a tweet from a prominent Tesla investor who said that only a buyback or a doubling of profit could reverse the stock’s decline.
