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Opinion

Opinion: Elon Musk’s Twitter resignation and why I’m selling Tesla stock

Elon Musk's decision to resign as Twitter's CEO and the failing Tesla stock raises concerns amongst shareholders investing in the companies.
<a href="https://highschool.latimes.com/author/kaiwenzhang24/" target="_self">Kaiwen Zhang</a>

Kaiwen Zhang

December 29, 2022
Elon Musk recently announced that he would step down as Twitter’s CEO once he found a successor for the job, as he stated that he would abide by a poll that saw Twitter users vote in the favor of him resigning from the job. However, a past tweet from Elon indicated that he believed nobody would be able to follow in his footsteps, stating that “No one wants the job who can actually keep Twitter alive”. As this is happening for Twitter, Tesla is planning layoffs and implementing a hiring freeze for the next fiscal quarter.

As a Tesla investor myself, seeing shares of the stock fall down to $137, a two-year low, really creates some trepidation about the future of the company with Elon trying to manage both companies effectively. Even Ross Gerber, a prominent Tesla investor has tweeted that “Tesla stock price now reflects the value of having no CEO.” I believe that Tesla shares will have more room to fall if Elon doesn’t figure out his Twitter situation soon, as shareholders are growing weary of his antics on Twitter. I want to see Elon resign as a CEO from Twitter, focus on running both companies successfully, and help Tesla get through their financial slump before considering buying back in. In the past couple of weeks, Musk has sold nearly 3.5 billion dollars worth of Tesla stock, and many investors are even calling Tesla’s board of directors to replace Musk as CEO.

A lot needs to be done for Tesla shareholders like me to regain faith in the stock and Elon himself. I’ve already sold about half of my total shares in the company, and with uncertainty surrounding whether or not Musk will hold true to his promise of stepping down and finding a new CEO, there is a lot of reason to be panicking if you own Tesla stock.

Furthermore, with a predicted decrease in sales in China due to COVID-19 ravaging the country following the Chinese government’s reversal on the restrictions for people with COVID-19. With China making up a large portion of Tesla’s global sales, there could be a massive loss in sales for the next quarter and more room for the stock to go down. Elon himself has called the stock cheap, but he has demonstrated not being willing to buy back more shares himself, demonstrating no confidence in the company itself.

Tesla shares still trade at about 42 times its earnings, making it very overvalued, especially for an automaker. Tesla is no traditional car company, but its recent downturn coupled with the hiring freeze and Elon’s unpredictability make it a very risky investment for the near future that I am personally avoiding. 

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