Elon Musk’s star is fading, in the firmament of the planet’s great fortunes. For a while, the richest man in the world, the whimsical billionaire, founder of Tesla and successful entrepreneur (Paypal, SpaceX, etc.), had to give up his crown to Bernard Arnault (main shareholder of LVMH, whose stock market value has just rise to 400 billion euros). And this, against the background of the descent into hell of the Tesla share, divided by 3 since the historic peak recorded in November 2021, when the stock market value of the American giant of the electric car was 13 figures (with a capitalization well above 1 trillion dollars).
Tesla’s very negative trajectory on the stock market was correctly anticipated by Momentum, Capital’s premium stock market investment letter and newsletter, which alerted its subscribers with excellent timing to the risk of a sharp drop in the stock (especially on the basis of technical analysis), a few months ago. The descent into hell of Tesla stock is due to multiple factors. Overview.
Despite a record profit, Tesla should not pay taxes this year in the United States
First, the automobile market is under pressure and its prospects are at half mast. “It will remain very difficult over the next few years”, predicts Nicolas Domont, of Optigestion, interviewed by Capital. And this, after the already difficult years of 2020, 2021 and 2022, marked by the Covid-19 pandemic and its fallout on the economy, the closure of China (which only very recently turned its back on its strict zero-Covid) and the deterioration of the global economy against a backdrop of war in Ukraine and the explosion of inflation (which weighs on household purchasing power and weighs on their consumption, including that of electric vehicles despite the growing market share). “The disruptions in the production logistics chain, the lack of parts and the shortage of semiconductors have hit the entire automotive industry hard,” notes Nicolas Domont in this regard.
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Tesla was not spared, especially since China is an important link in its global presence. And Chinese automakers are currently experiencing a surge. They will overshadow Tesla and other Western automakers over the next few years. “The coming intensification of Chinese competition will lower the selling prices of vehicles, which will hurt the margins of Tesla and other manufacturers. Tesla is gradually losing its premium side, as the offer from Chinese competitors tends to expand. As the supply of quality electric vehicles increases in the face of demand, sales prices tend to fall. And Tesla’s Model 3 is not spared by this phenomenon”, underlines Nicolas Domont.
Elon Musk, Jeff Bezos… billionaires soon to be much more taxed in the United States?
In the fourth quarter of 2022, Tesla disappointed financial analysts with its vehicle deliveries, which came in below expectations, despite aggressive sales price cuts. And the prospects, degraded, are uncertain. For 2023, the specter of recession is likely to weigh on demand for electric vehicles, which worries equity investors.
The latter also sanctioned a lesser involvement of Elon Musk in the management of Tesla, the billionaire being busy straightening Twitter. And to finance this big acquisition, Elon Musk also had to sell tens of millions of Tesla shares, thus mechanically increasing the pressure on the stock market of the auto giant. According to figures from VerityData, Elon Musk sold a total of 94,202,321 Tesla shares in 2022, at an average price of $243.46 per share, for pre-tax proceeds of approximately $22.93 billion. Overall, Musk has sold nearly $40 billion worth of Tesla stock since an all-time high in November 2021.
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Excluding taxes related to the exercise of stock options, and in the absence of a specific securities disposal tax in Texas, Elon Musk will have to pay a 20% tax on Tesla shares sold in 2022 under the “federal capital gains tax”, notes Jean-François Fliti, Allure Finances partner interviewed by Capital. A prospect that should force Elon Musk to write a tax check for 4.59 billion dollars to the American tax authorities…
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