Tesla, once a shining star among Wall Street’s elite ‘Magnificent 7’ technology companies, is now grappling with a severe crisis.
The company has experienced a 12% stock market plunge, eroding a staggering $80 billion from its market value in record time. This downturn comes amidst mounting criticism of Elon Musk’s leadership and formidable challenges on both competitive and financial fronts.
Stock Value Plunge
The dramatic decline in Tesla’s stock value aligns with Elon Musk’s request to the board for a 25% stake in the company—equivalent to $80 billion. This move is purportedly aimed at preventing hostile takeovers and securing control over future artificial intelligence projects. Musk has even threatened to pursue these projects outside of Tesla if his demands are not met.
Despite a significant increase in net profit in the last quarter of 2023, Tesla’s revenues fell short of expectations, causing concern among investors. Musk’s projection of slower growth in 2024 has further exacerbated the situation. Notably, Musk has also suggested the imposition of tariffs on Chinese electric cars, seen as a significant threat to global automakers.
The potential departure of Tesla from the prestigious ‘Magnificent 7,’ as announced by CNBC’s Jim Cramer, marks a significant shift. These companies form the bedrock of the S&P 500 index and typically weather global economic fluctuations with resilience. Tesla’s susceptibility to these variations, highlighted by the need to lower its vehicle prices, raises questions about its long-term stability within this elite group.
Criticism of Tesla’s Leadership
Tesla’s management, particularly Elon Musk’s role, has faced numerous criticisms (and that’s why Tesla management doesn’t know how to act) . Unlike other business leaders, Musk appears to tie his commitment to the development of Tesla’s artificial intelligence and robotics to obtaining a larger share of the company and more influence within it.
As Tesla navigates this tumultuous period, its position within Wall Street’s ‘Magnificent 7’ hangs in the balance. The company’s challenges, coupled with the controversies surrounding Musk’s demands, paint an uncertain future. Investors and industry observers are closely watching to see if Tesla can weather the storm and retain its coveted status among the tech giants on Wall Street.
