Twitter's Musk blamed for Tesla's lowest drop in shares in two years
While investors throw partial blame on Musk's transfer to Twitter, Musk weighed in by placing blame on the skyrocketing interest rates caused by the Federal Reserve.
Tesla shares have fallen to their lowest for the first time in two years as Tesla's stock said goodbye to more than half of its value since October. This has left investors concerned that Musk has replaced his efforts in Tesla with Twitter.
This comes after Musk asked Twitter users if he should step down as CEO of the social media platform, with the majority voting yes, to which he then responded that he would only if he found the 'fool' to take on the job.
Blame it on the Fed
The drop, which was recorded at 11.4%, was followed by a report published by Reuters about the company's alleged plans for a reduced production schedule in January at its plant in China. Great Hill Capital Chairman Thomas Hayes cited a forecast from Chinese rival Nio in the key market by saying: “There’s no question there are demand fears,”
He emphasized that the electric car company's stock was enduring a “perfect storm” in light of interest rate hikes, tax-loss selling, and the sale of shares. Tax-loss selling refers to the act in which an investor sells their assets that have decreased in value to offset taxes owed on capital gains by creating a loss.
On account of that, a Reuters report demonstrated that the prices of used Tesla cars were plunging faster than the prices of other carmakers. While investors have thrown partial blame on Musk's transfer to Twitter, the former CEO weighed in by placing blame on the skyrocketing interest rates caused by the Federal Reserve after having said: “people will increasingly move their money out of stocks into cash, thus causing stocks to drop”.
According to a US Securities and Exchange Commission (SEC) filing in November, Musk sold nearly $4 billion in Tesla shares over a week after he closed his $44 billion purchase of social media giant Twitter.
Tesla shareholder files against Musk
Looking for ways to pay for the Twitter deal, Musk took on billions of dollars in debt and earlier sold $15.5 billion worth of Tesla shares. He even went on to include an idea to charge verified accounts 8$ a month.
The SEC indicated that he sold almost 22 million of the electric vehicle company's shares worth almost $3.6 billion from December 12-14, the second large sale since his acquisition of Twitter in October. Musk currently owns more than 423.6 million Tesla stakes, which is equivalent to 13.4% of the company's shares.
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Just last month, the Twitter chief appeared in front of a Delaware court, for the second time since 2021, to defend the $56 billion compensation package he got in 2018, following a lawsuit by Tesla shareholder Richard Tornetta.
Tornetta accused the Tesla CEO of influencing the board of directors to receive the huge pay package while only acting as a "part-time CEO" as the suit mentions that Musk was not devoting his time to Tesla as he runs several companies at once, and has thus asked the court to rescind the package.
The shareholder's attorney, Gregory Varallo, attempted during the hearing to prove that Musk was rewarded the massive sum of money unjustly while accusing the board of directors that they have failed to work in the best interest of the company's shareholders.