By Meirav Janus
On Friday, March 11, 2022, Tesla’s shares dropped by 9.07%. Elon Musk, the founder of Tesla as well as his private space company, SpaceX tweeted that Tesla was seeing “significant recent inflation pressure in raw materials and logistics,” adding later “and we are not alone.” The tweet from Musk-led investors to contemplate potential 2022 profit margins, due to fear of Musk’s time being split between Twitter and Tesla. Prior to the drop, the company’s shares rose nearly 2%- this had to do largely with rumors of a production ramp-up.
Earlier last week it was revealed that Elon Musk finally acquired Twitter after a weeklong saga during which he first became the company’s largest shareholder, then offered to buy it outright.. Musk stated, “The Tesla autopilot team and AI team has done an incredible job building real-work Al, and were able to go to the wide beta for all self-driving customers in North America this year.” Additionally, Musk promised a “dedicated robotaxi.” According to the Washington Post, Musk ignored a legal requirement that he file a disclosure with the Securities and Exchange Commission after exceeding 5% ownership of Twitter.
An article posted by the Washington Post, claims that Musk’s purchase of Twitter is what led to the more than $100 billion drop in Tesla’s stock Tuesday. Post the purchase, the company’s stock dropped more than 12% which brought its capitalization down to $906 billion; it had previously been $1 trillion. This all came the day after Musk and Twitter settled on an agreement for Musk to take partial ownership of Twitter. Analysts in the Washington Post said Musk’s net worth will be affected due to his new commitment to the Twitter purchase and fear he will become distracted from his role as Tesla CEO. Last week Musk’s net worth reached $270 billion but was down to $240 billion on Tuesday.
On Tuesday, May 10, The Economic Times reported Tesla’s stock dropped 31%, marking an even bigger loss. A potential reason for all these losses is the opinion of Musk’s inventors who believe that Musks’ involvement with Twitter could be a distraction to Tesla. Musk as well recently completed an $8 billion Tesla stock sale, which is rumored to be connected to the Twitter transaction.
On Monday there was a wider tech meltdown as investors sold shares in global tech firms. This sent Nasdaq down almost 5%, as fear of inflation rises. This contributed to Tesla’s major stock drop. According to Barrons, many automobile stocks dropped because of the increased price of lithium. By 2025 it is said that the annual demand for lithium will rise to 1.5 million metric tons of lithium carbonate equivalent. That is up to about 500,000 metric tons used in 2021.