TOPLINE Tesla shares experienced a downturn on Monday, reaching their lowest level since last May, marking a continuation of the 2024 decline for Elon Musk’s electric vehicle company, which is trailing behind other prominent technology stocks.
KEY FACTS Tesla’s stock dropped by as much as 6% to $175 before recovering slightly by market close, resulting in a 3.7% loss and bringing the year-to-date loss for the struggling auto giant to a substantial 27%.
This performance makes Tesla the worst-performing stock listed on the benchmark S&P 500 index.
The decline in Tesla’s 2024 trajectory started with a post-earnings plunge after the company fell short of Wall Street estimates for quarterly profit and revenue. The recent selloff aligns with increased controversy surrounding Musk, who has sought significantly greater power within Tesla and utilized his social media platform, X, to promote fringe-right claims.
Elevated concerns about Tesla’s board’s ability to govern Musk reached a peak with a Saturday report in the Wall Street Journal alleging that Musk and Tesla board members have consumed illegal drugs together (Musk previously asserted that his drug tests contained “not even trace quantities” of drugs or alcohol).
CRUCIAL QUOTE Wedbush analyst Dan Ives described the allegations outlined in the Journal as the latest “black cloud” over Tesla, partially attributing Monday’s stock dip to the salacious report.
SURPRISING FACT Tesla’s shares have experienced a more significant decline this year compared to other notable companies, such as Boeing (down 21% amid safety concerns about its commercial airplanes) and Archers-Daniels-Midland (down 21% due to an investigation into alleged accounting fraud).
KEY BACKGROUND Tesla’s stock has historically been influenced by the unpredictable behavior of Musk. Notably, in 2022, Tesla experienced a 65% selloff as Musk sold a substantial portion of his Tesla holdings to fund the acquisition of the social media platform now known as X. Tesla’s performance in 2024 is notably worse than that of other members of the “magnificent seven” tech stocks, with only Apple sharing a year-to-date decline, albeit a milder one at 2%. Both Apple and Tesla are the only companies in the group not reporting double-digit sales growth last quarter. Tesla’s profits declined by 23% from 2022 to 2023, and analysts project negative bottom line growth for the company again this year, according to FactSet.
FORBES VALUATION Musk currently holds the title of the world’s second-richest person, with an estimated net worth of $195 billion. Musk’s wealth has diminished by about $55 billion since the end of 2023, a result of Tesla stock’s decline and a Delaware judge nullifying a $51 billion Tesla stock-based compensation for Musk last week.