- Tesla’s stock has endured many trials and tribulations over the past year, but is now back on track.
- After a record drop in 2022, shares of the company owned by Elon Musk have rebounded strongly this year.
- Here’s a timeline of the dramatic events that drove Tesla’s tumultuous run on the stock market over the past year.
Tesla stock is on a roll this year.
Just seven weeks into 2023, it has already jumped 64% and several analysts are predict a new rally in the shares of the maker of electric vehicles. Veteran Wall Street trader Keith Fitz-Gerald sees the stock gain another 48% while Barclays’ Dan Levy projects a 36% rise.
It’s a stunning reversal of fortune from 2022, when Tesla suffered a precipitous drop in market value as a series of dramatic events – including the Federal Reserve’s aggressive interest rate hikes and the CEO Elon Musk’s $44 billion takeover of Twitter – spooked investors.
Thanks to dramatic swings in investor sentiment, the past 12 months or so have marked perhaps the most turbulent phase on record for one of the most prominent names in the stock market. The electric vehicle maker’s market capitalization, which hit an all-time high of more than $1.2 trillion in late 2021, plunged to a low of $341 billion in December 2022, before rising back above $600 billion. dollars this week.
Here’s a timeline of the key events of the past year that have fueled Tesla’s stock market roller coaster.
March 2022: Tesla opens a European factory
Tesla has opened its first European factory near the German capital, Berlin. the said gigafactory was given the green light to produce 500,000 vehicles a year and employ 12,000 workers. Its launch sent shares of the electric vehicle maker soaring nearly 8%, followed by a rally through the end of the month.
April 2022: Musk’s $44 billion Twitter deal
In April last year, Musk reached an agreement to buy Twitter for $44 billion. The buyout plan sent Tesla shares plummeting more than 12% to wipe out $126 billion in value in a single day as investors feared the billionaire CEO would sell some of his shares in the electric vehicle maker to fund the takeover.
Prior to the official settlement, Tesla shares continued to extend losses over the following weeks, leading to a 23% cumulative decline in April.
May 2022: Twitter tantrums continue
Tesla shares continued to be under pressure throughout May as investors digested Musk’s deal to take Twitter private.
Then, in a new twist, the takeover plan was thrown into doubt, with Musk threatening to call off the deal, saying the social media giant was “actively resisting” his efforts to investigate. fake accounts. Shares of the electric vehicle maker then rose more than 5% after Musk announced the deal was on hold.
October 2022: missed delivery targets
Shares of the automaker slid throughout October after it released third-quarter results that missed analysts’ estimates. The company said it produced 365,923 vehicles and delivered 343,830 in the third quarter, which set a new record but was below the expected number of around 358,000.
Its stock fell 8.6% on the report, the lowest level in three months.
November 2022: return of anxiety on Twitter
At the end of October, Musk officially became the owner of Twitter. The takeover continued to weigh on Tesla stock through November as investors feared Musk’s focus on the automaker may be limited as he is distracted by his responsibilities at the social media company.
In early November, Musk revealed he sold $4 billion worth of Tesla stock after his Twitter buyout closed. The electric vehicle maker’s stock fell to its lowest level in 2 years on the news.
December 2022: Fed tightening, China woes
By the end of December, Tesla’s stock was down around 65% for the full year, thanks to a combination of factors including Musk’s chaotic Twitter buy, a lackluster economic backdrop and a slowdown in Chinese demandthe world’s largest market for electric cars.
Musk himself has pointed to the Federal Reserve’s aggressive interest rate hikes – aimed at cooling inflation – as the main reason for Tesla’s decline. Rising interest rates tend to weigh on growth stocks such as Tesla as they make borrowing more expensive, eating away at the company’s future cash flow.
“Put simply: as bank savings account interest rates, which are secured, begin to approach stock market returns, which are unsecured, people will increasingly move their money from stocks to cash, causing stocks to plummet,” the second-richest man said. tweeted to defend against falling equities.
Meanwhile, COVID-19 infections in China have led to a drop in production at its Shanghai plant, which is its largest global factory in terms of production. Tesla shares fell after the company announced it would implement a reduced production schedule at its Shanghai factory.
January 2023: A new year, a new Tesla
A steady decline in inflation has fueled investor expectations that the Fed could stop raising interest rates or even start cutting them later this year – and that’s been good news for the automaker. electrical.
This, coupled with a strong quarterly report of record profits, helped fuel a new rally for Tesla, which saw its market capitalization rebound above 500 billion dollars.
February 2023: Price cuts drive demand for electric vehicles
So far this month, Tesla has rocketed higher and higher. This is largely due to a series of recent price cuts announced by the electric vehicle manufacturer, which revived demand in the Chinese market.
The automaker sold 55,796 vehicles in China in January, according to data released Friday by the China Passenger Car Association – up 18% from December and 10% from a year ago.
The stock also recovered thanks to the announcement of a broader U.S. tax credit for electric vehicles. Under the Cut Inflation Act, more Tesla vehicles can qualify for electric vehicle tax credits of up to $7,500 per car.