As Elon Musk’s only publicly traded company, Tesla (NASDAQ: TSLA) has become something of a surrogate for the public reaction to the fortunes of all his other firms and the billionaire’s own escapades.
Under the circumstances, it may come as no surprise that during the March 10 session – the day when the social media platform X was experiencing a protracted global outage – TSLA shares collapsed a full 15.43% to their latest closing price of $222.15.
The daily drop also ensured Tesla earned the dubious honor of being Monday’s worst-performing S&P 500 stock.
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While the X outage contributed substantially to the overall quality concerns about Musk’s companies – Tesla cars have a reputation for being spontaneous combustion engines despite data not fully backing this up, and users have been concerned about their privacy ever since he fired most Twitter staff – the event and the downturn may not be a big nail in TSLA stock’s coffin.
Indeed, rather than the site’s infrastructure falling apart, Elon Musk claims that a ‘massive cyberattack’ caused the worldwide outage on March 10.
The South African-Canadian-American billionaire has been making fresh enemies in many parts of the world in recent months with his statements and actions and himself claims that the attack came from Ukraine – one of the countries he antagonized.
Though the claim that the causes of X’s issues were external, not internal, does much to alleviate the immediate concerns – a fact hinted at in Tesla stock’s 2.79% Tuesday pre-market rise to $228.35 – an increasing lack of goodwill toward the businessman and his businesses remains a long-term concern.
Why Tesla stock price collapse may be unrelated to X outage
Despite the massive TSLA share daily drop coinciding with the X outage strongly indicating a connection, there remain alternative readings for nearly everything pertaining to the electric vehicle (EV) maker in recent months.
As shocking as it is, Tesla stock’s price drop isn’t a break in the market trend but rather the deepening of the prevailing pattern. The fact that the equity closed 53.71% below its highs held as recently as December 17, 2024, proves the brand has suffered much damage with or without the X outage and may position the pre-market uptick as a mere correction.
Furthermore, Elon Musk’s political activities have done much direct damage to Tesla on the business side. Its vehicles have been nicknamed ‘swasticars,’ became targets of vandalism, and even a ministerial call for a boycott in Poland.
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Despite Tesla being a large and historically successful car manufacturer, it had hit its $700 billion press time valuation thanks to technological hype driven, in no small part, by Elon Musk himself.
The big tech – or, as many critics would describe it, vaporware – factor is also evident in the fact that Toyota (TYO: 7203) is the second most valuable vehicle company in the world with a market capitalization of $250 billion despite selling nearly 11 million cars in 2024 compared to Tesla’s 1.79 million.
Despite the setup leading multiple analysts to speculate that TSLA stock’s uncannily high price is set for a collapse, it is worth pointing out that Elon Musk has expressed confidence that his EV maker will do well in the long term. Lastly, President Donald Trump personally backed the firm by saying he’d ‘buy a new Tesla’ to show support.
Featured image via Shutterstock
