As Feds Close in, Tesla Stock Takes Another Dive

Federal safety regulators are “working really fast” to resolve an ongoing probe of Tesla’s Autopilot system, according to the acting head of the National Highway Traffic Safety Administration.

Tesla’s losing value and the faith of some of its big investors as its falling stock price suggests.

The comments by Ann Carlson appear to be one of the reasons why a brief rally on Wall Street faltered Tuesday, Tesla’s stock taking another tumble after losing 65% of its value in 2022. But a variety of other factors also appear to be in play, including concerns about the earnings report the EV manufacturer is set to release Jan. 25.

Furthermore, analysts and investors continue to raise concerns about Tesla CEO Elon Musk, one of the company’s largest investors complaining the South African-born executive is “killing” the car company. “If I knew” how distracted Musk had gotten after purchasing Twitter, “I wouldn’t have invested in Tesla,” said Leo KoGuan, who has put $3 billion into the automaker.

“Investing a lot of resources”

The once high-flying Tesla has run into a series of problems during the last 12 months. That includes growing concerns about its two semi-autonomous driving technologies. The original Autopilot system is the target of an ongoing investigation by NHTSA that, analysts suggest, could see as many as 830,000 vehicles recalled. The probe was triggered by a series of crashes, including ones in which Autopilot-equipped vehicles have slammed into stationary emergency vehicles.

“We’re investing a lot of resources” into the probe, Carlson told reporters on Monday. The probe, she added, “require(s) a lot of technical expertise, actually some legal novelty and so we’re moving as quickly as we can, but we also want to be careful and make sure we have all the information we need.”

NHTSA’s acting chief Ann Carlson said the agency was nearing the end of an ongoing investigation into Tesla.

Autopilot, along with the newer Tesla Full Self-Driving system, has come under repeated fire of late. Both systems are the target of a series of lawsuits and probes looking into not only their safety but also whether Tesla overstated their capabilities. One investigation launched by the California Department of Motor Vehicles could see Tesla barred from selling vehicles in that state.

Missing the target

Investors have also raised concerns about Tesla’s sales and earnings. Even though the carmaker set an all-time record for deliveries last year, at 1.31 million, the numbers fell short of analysts’ consensus forecast, even after launching hefty new incentives in the U.S. and China. Those givebacks are expected to cause a shortfall in fourth-quarter profits — and Gene Munster, an analyst with Loup Ventures, on Tuesday warned that future Tesla earnings could dip by as much as 25%.

“I think that there’s going to be some earnings pressure based on some of the discounting,” Munster said during an interview on CNBC.

Investors might have been more forgiving but for concerns about CEO Musk — whom many accuse of effectively walking away from Tesla to focus on his $44 billion takeover of Twitter.

“He broke the stock,” said Ross Gerber, head of the Gerber Kawasaki investment firm.

Shifting blame

Musk has tried to downplay his role in Tesla’s plunge on the Nasdaq exchange — but analysts say there’s a more coincidental link in the timing of that rout and the CEO’s bid for Twitter. It began last April, around the same time Musk announced his $44 billion offering, and accelerated once the deal was completed in October. All told, Tesla shares lost nearly two-thirds of their value in 2022.

In the process, the automaker’s market capitalization dipped from around $1.2 trillion to less than $350 million by the time shares hit a brief, 52-week low of just $101.81.

In the past week, TSLA shares have rallied, bouncing up into the $124 range before settling back. At the closing bell on Tuesday, the stock dipped $2.22 for the day, to $118.85.

CEO Musk sets a dubious record

As much as the plunge has hammered the holdings of big-time investors like Ross Gerber and Leo KoGuan, Musk himself has seen his fortunes fade — so much so that he earned a dubious place in the Guinness World Records. It determined the serial entrepreneur has now lost more money than anyone in history.

Since November 2021, using Forbes data, the Guinness book estimates Musk has lost $182 billion — though some sources estimate the number is closer to $200 billion. Musk’s current worth is still impressive, at around $132 billion. But, before the downturn, reported Guinness officials, he was worth $320 billion.

The previous record was held by Japanese tech investor Masoyoshi Son, the head of the SoftBank Conglomerate.

Long-term prospects

Whether Musk — and other Tesla shareholders — will bounce back is far from certain. There’s a broad — though not universal — consensus the stock could continue to plummet, especially if the fourth-quarter numbers fall short of expectations.

But some bulls remain. It may take time to recover, said Loup’s Munster, but longer term, “I remain positive on the company.”