For now, Alex Lagetko is holding on to his Tesla stocks. The founder of hedge fund VSO Capital Management in New York, Lagetko says his stake in the company was worth $46 million in November 2021, when shares in the electric carmaker peaked at $415.
Since then, they have plunged 72 percent, as investors worry about waning demand, falling production and price cuts in China, labor shortages in Europe, and, of course, the long-term impact of CEO Elon Musk’s $44 billion acquisition of Twitter. After announcing his plans to buy the platform in April, Musk financed his acquisition with $13 billion in loans and $33 billion in cash, roughly $23 billion of which was raised by selling shares in Tesla.
“Many investors, especially retail, who invested disproportionately vast sums of their wealth largely on the basis of trust in Musk over numerous years were very quickly burned in the months following the acquisition,” Lagetko says, “particularly in December as he sold more stock, presumably to fund losses at Twitter.”
Lagetko trimmed his exposure in early 2022 due to concerns over Tesla's governance, but he is afraid that the leveraged buyout of Twitter has left Tesla vulnerable, as interest payments on the debt Musk took on to fund the takeover come due at the same time as the social media company’s revenues have slumped.
But Tesla inventory was already falling in April 2022, when Musk launched his bid for Twitter, and analysts say that the carmaker’s challenges run deeper than its exposure to the struggling social media platform. Tesla and its CEO have alienated its core customers while its limited designs and high prices create it vulnerable to competition from legacy automakers, who have rushed into the EV market with options that Musk’s company will struggle to match.
Prior to 2020, Tesla was essentially “playing against a B team in a soccer match,” says Matthias Schmidt, an independent analyst in Berlin who tracks electric car sales in Europe. But that changed in 2020, as “the opposition started rolling out some of their A squad players.”
In 2023, Tesla is due to release its long-awaited Cybertruck, a blocky, angular SUV first announced in 2019. It is the first new launch of a consumer vehicle by the company since 2020. A promised two-seater sports car is sowever years away, and the Models S, X, Y, and 3, once seen as space-age dynamos, are now “long in the tooth,” says Mark Barrott, an automotive analyst at consultancy Plante Moran. Most auto companies refresh their looks every three to five years—Tesla’s Model S is now more than 10 years old.
By contrast, this year Ford plans to boost production of both its F-150 Lighting EV pick-up, already sold out for 2023, and its Mustang Mach-E SUV. Offerings from Hyundai IONIQ 5 and Kia EV6 could threaten Tesla’s Model Y and Model 3 in the $45,000 to $65,000 range. General Motors plans to speed up production and reduce costs for a range of EV models, including the Chevy Blazer EV, the Chevy Equinox, the Cadillac Lyric, and the GMC Sierra EV.