'A perfect storm': It's anyone's guess when Tesla stock will stop tanking

Brian Sozzi

At this point, it may be easier to change a tire on a Model S in under 10 minutes than to try to call a bottom in Tesla's (TSLA) battered stock.

Shares of the EV maker tanked 11.4% on Tuesday's session on reports the company would run at reduced capacity at its key Shanghai plant through January, which raised fresh doubts on the current pace of consumer demand. Tesla's ticker page was among the top three visited on Yahoo Finance, underscoring the ongoing angst on the always volatile stock.

Tesla's decline finally took a bit of a breather on Wednesday, as it was up slightly above the flatline.

But in the wake of the latest drop, the startling stats on Tesla's stock price (and anything tied to it) became that much more jaw-dropping:

  • One-month: -41%

  • Three-month: -60%

  • Six-month: -55%

  • Year-to-date: -70% (S&P 500 -19%)

  • Market cap lost year-to-date: $241 billion

  • Elon Musk net worth lost year-to-date: -$141 billion

Analysts contend the bottom is not yet in sight for the stock despite the bruising sell-off into 2023.

"Musk set off this five-alarm fire on Tesla's stock and he is the only one that can extinguish it. It's a perfect storm between the Musk Twitter fiasco and now demand cracking," Wedbush analyst and vocal Musk critic Dan Ives told Yahoo Finance.

In large part, the fact no one on the Street is trying to make a bottom call on Tesla's stock reflects the mounting bad news swirling around the company.

First are the negative optics on demand both in the U.S. and China.

Tesla said on its website last week it will offer $7,500 discounts on Model 3 and Model Y vehicles delivered in the U.S. in December. That coincides with analysts slashing fourth-quarter delivery estimates ahead of them being reported in early January.

Then the elephant in the room remains — Musk's continued chaotic running of Twitter and how it may impact the operations of Tesla.

The prospect of Musk selling more shares to fuel his turnaround at Twitter have also weighed on the stock. Musk said in a new Twitter spaces chat a week ago he wouldn't sell anymore Tesla shares until 2024 at the earliest. He has this year made similar proclamations only to subsequently sell more stock.

Rege-Jean Page looks at Elon Musk as they arrive at the In America: An Anthology of Fashion themed Met Gala at the Metropolitan Museum of Art in New York City, New York, U.S., May 2, 2022. REUTERS/Andrew Kelly
Rege-Jean Page looks at Elon Musk as they arrive at the In America: An Anthology of Fashion themed Met Gala at the Metropolitan Museum of Art in New York City, New York, U.S., May 2, 2022. REUTERS/Andrew Kelly (Andrew Kelly / reuters)

In other words, investors simply do not believe Musk in this regard — and they are voicing that view loudly.

Package all this up, along with the fact Tesla shares still trade on rich valuation multiples relative to the broad market, and you have a selling event that may not have run its course until a clear positive development emerges. (Musk handing over the CEO reigns at Twitter would be a huge help, analysts say.)

Added Ives: "We believe the stock is oversold, but it will be a rough ride ahead."

Sounds about right.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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