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Tesla shares are ending their tumultuous year with even more turmoil: they rose nearly 6% on Thursday but are still down more than 10% since last week. And a further cut to its Morgan Stanley price target isn’t helping.

In the accumulated result for the year, shares have accumulated a drop of around 70%. Analysts at Morgan Stanley on Thursday said the company’s share price decline represented a buying opportunity, but they cut their price target from $330 to $250 a share. Tesla shares are trading at $122, up about 8% on Thursday.

Morgan Stanley still believes the company is somewhat undervalued as a result of recent large sales, citing its advantage over the electric car competition and potential tax advantages as a result of the Inflation Reduction Act passed earlier this year.

The losses, however, further damaged the fortune of one of the richest people in the world. According to the Bloomberg Billionaires Index, CEO Elon Musk is now worth $132 billion – less than half of what he was worth at the start of the year. He lost the title of the world’s richest person two weeks ago to Bernard Arnault, chairman of French luxury goods giant LVMH (LVMHF).

A popular misconception has arisen about Elon Musk and Tesla: the megabillionaire’s love affair with Twitter is the main reason Tesla’s stock has lost so much value this year.

Even as Musk signals he may give up his CEO title on Twitter, investors have become concerned that the outlook for Tesla’s sales and earnings is worsening. A sign of weakening demand: Tesla announced a rare sale. The company has offered two discounts for buyers who receive a vehicle before the end of the year, initially offering a $3,750 discount earlier this month. Tesla then doubled that discount to $7,500 last Thursday.

“Tesla is clearly starting to see cracks in demand in China and the US at a time when EV competition is increasing across all industries,” said Dan Ives, technology analyst at Wedbush Securities and a Tesla bull who cut your price target for the stock over the past year. Friday $250 to $175. “The price cuts Tesla enacted were the last straw that broke the camel’s back on inventory.”

Another reason Tesla shares are plunging: The US economy could slip into a recession next year, hurting car sales. Musk said in a Twitter Spaces call two weeks ago that he predicts the economy will be in a “serious recession” by 2023.

“I think there will be some bigger macro drama than people currently think,” he said, according to Reuters, adding that homes and cars will be “disproportionately impacted” by economic conditions.

Part of the problem with Tesla’s stock price is that critics question whether it was ever worth the trillion-dollar valuation it had at the start of the year. At its peak, Tesla was worth more than the 12 biggest automakers on the planet combined, despite having a fraction of the sales of any one of them. Today it is worth $399 billion.

“He outdid himself in the short term,” said Gene Munster of Loup Ventures, another Tesla fan. “I still believe this could be a much bigger company. I think he will see these types of numbers again. But it can take a long, long time to get there.”

Tesla’s growth prospects – a target of 50% sales growth per year – helped drive that assessment. It admitted in October that it will miss its sales target for this year.

The stock’s rise to dizzying heights – rising 743% in 2020 alone – was fueled by Musk’s reputation as a genius who would revolutionize the massive global auto industry.

“Tesla was seen as a disruptive tech company, not an automaker, and a lot of that premium is related to Musk,” Ives said.

Tesla critics said much of its sky-high valuation was based on promises Musk made about future products, many of which came years after they were originally promised.

A prime example is the Cybertruck, Tesla’s pickup truck, first launched three years ago with promises that production would begin in 2021.

Now, production is set to begin next year, with an increase in production in 2024 putting it years behind other electric pickup offerings from Ford and EV maker Rivian, both of which have electric pickups available for purchase today. It may also go along with General Motors’ planned offerings of electric pickup trucks.

“Elon Musk has a pathological problem with the truth,” said Gordon Johnson, one of Tesla’s most vocal critics among analysts. “When people say he’s a genius and an innovator, it’s based on all his promises that he never keeps.”

Johnson said Tesla shares will take a much steeper plunge ahead once they start pricing like other automakers instead of their promises. He said that for Tesla to meet its growth targets, it needs to build new factories almost every year, but that the new factories in Germany and Texas that opened in the spring are not yet operating at full capacity. And he said his factory in China had to reduce production due to poor market sales in the face of Covid restrictions.

“Demand in the US has collapsed,” he said. “Two months ago, your waiting time was two or three months. Now you can get one right away. They will build more cars than they sell for the third straight quarter. It is the definition of excess capacity.”

Tesla is still by far the world’s biggest electric vehicle maker, although that title is being challenged in some key markets, by Volkswagen in Europe and BYD in China. And more competition is coming from established automakers like Ford and GM.

That’s not to say Twitter hasn’t played a role in Tesla’s stock price crash this year: Tesla shares have lost more than 65% of their value since Musk’s interest in Twitter was first disclosed in April. , down nearly 50% since he closed the deal. at the end of October.

Investors were disappointed that Musk appeared to be paying for much of his $44 billion purchase of Twitter by selling Tesla stock. Musk, Tesla’s biggest shareholder, has sold $23 billion worth of Tesla stock since his interest in Twitter went public in April.

In a Twitter Spaces call last week, Musk pledged that he would not sell Tesla (TSLA) stock until at least 2024, if not beyond. But he defaulted on an earlier promise in April that he had stopped selling Tesla (TSLA) stock, selling $14.4 billion of that stock since then.

“It’s been a Pinocchio situation for Musk to say he’s stopped selling stocks. Investors want to see you act and not just talk the talk,” said Ives.