Tesla has now fallen to a level it first achieved in the summer of 2020. The stock is down about 66 percent since all-time highs in November 2021.. you go and compare this to the broader Tech index like the QQQ which tracks the NASDAQ 100. Well, that's down about half as much from highs down 32 percent.

And if you ask a political pundit who doesn't understand the stock market and doesn't like Elon Musk, they'll tell you that this is all down because of Elon Musk's Shenanigans and failures at Twitter Or they'll tell you it's because of his political rhetoric. And if you ask Mr Musk, he'll say it's because of the Federal Reserve hiking rates and drawing money out of stocks. But if you follow the stock market and you're relatively level-headed, you know that it's a combination of these factors and a few more. And in this evening's lovely video, I Want to walk you through why Tesla stock is down so much and what you should know about when it's going to return, what's going to cause it to actually bottom and start bouncing and get up to another new all-time high again? And before we get into it, today's video is brought to you by Moomoo in the up to 20 free stocks that you can get when you sign up and deposit a small amount using our link down below.

Excellent trading platform and broker regulated by the SEC and Finra and all funds up to five hundred thousand dollars are Sipc insured. Make sure to take advantage soon. They also have an extra Christmas giveaway link below. Okay, so let's go ahead and start with Musk.

so sets Musk's acquisition of Twitter He has made himself into a more polarizing figure. To be fair to Musk, the media was already trying to do this long before Twitter but he's made the situation a lot worse. His personal brand of being someone whose main goal is to save human civilization through space exploration and eventual expansion and of course, sustainability here on Earth have taken a back seat in many people's eyes to his new role as one of the most powerful culture. Warriors Now I'm a fan of the Muskmeister and his goal of free speech and less censorship on big Tech platforms.

They have far too much power and we've seen so many examples where they've abused that power. I Also think he's one of the only authentic major Business Leaders in Corporate America which love or hate it. At least he says what he thinks but authenticity and Free Speech don't come cheap, They come with costs. You simply have to be willing to toe the line or some major institutional investors are going to start to bail on you.

The media is going to start ramping up attacks on you, You're going to lose tons of advertisers, and you may even lose some of your customers. He's created so much shareholder wealth that people are very, very slow to hop off the boat, but it's starting to become very, very apparent that where that boat is sailing is somewhere that a lot of these institutional investors don't want to be a part of. On top of that, you can't ignore the fact that Musk oftentimes pushes the lines a little bit farther than necessary. He seems to go out of his way to make himself controversial.

This type of stuff is going to make a lot of people think hey, maybe he's actually trying to push his own deeper agenda right. And if that agenda doesn't align with theirs, then boom, they are no longer your fan and you lose them I Know many people that see these Elon Musk tweets and think, hell yeah, you show them problem, knows all the people that he's showing well, they're gonna be pissed and they're not going to want to do business with them anymore. They're not going to want to be a supporter of him anymore if he continues this. A lot of people are going to see this as a deal breaker, and people that may not even care that he's saying this or may even agree with them may be thinking okay, wait yes I agree with them.

but I also want to make money I don't want to destroy my wealth because of this guy's culture War So they're thinking, hey, maybe in order to be impartial to my clients and my investors I'm going to go ahead and back away from the Muskmeister When you go and you exercise your free speech and you exercise what he's been exercising well, there's a cost to that. If I had a boss and I went up to him and I told him hey, you know what Mr Boss sir, you are fat and you're ugly. You look like a gorilla. You need to exercise or you might die in early death.

You know what he would say he would say Charlie you're fired, Go pack up your stuff and leave. Now Maybe I did something good by telling him that he needs to exercise. perhaps. and it was my free speech to say that.

However, there's a cost to honesty. there's a cost to transparency. And the thing with Elon Musk is it's not just him that is paying the cost. And boy, he is paying the cost.

But it's not just him that's paying the cost, it's also his shareholders, people that are attached and believe in his entire Empire and all of his vision. and I think he would do a great job if he was just focused on free speech and stopped with the personal weighing in on every situation. I think that if he had somebody else weigh in somebody else prominent at Twitter maybe that works under him, go and weigh in on all the issues. Well, it wouldn't be that big of a deal.

He could just say oh, I'm supporting free speech and you go ahead and you talk about whatever you want left or right. but when you're going out and you're consistently stoking the Flames with this sort of rhetoric, well, you're going to isolate a lot of people that you don't want to be isolating. I Know that there's so much fake news and reporting that goes on about Elon Musk and it gets spread all across the media. You saw that very very clearly when he started firing people, but it seems like he reads that and it angers him and then he goes and Stokes those Flames even more, which makes people even more pissed off and makes them even more toxic to work with.

Musk's rhetoric is making it so much harder. It's making Twitter advertisers harder to lock in. It isolates many major Tesla shareholders, and it hurts the public opinion of Musk in the eyes of say, Democrats who are more likely to buy EVS in the first place. If you are investing in a business, you want that business to have leadership that is more impartial.

You don't want your business run by a politician. Imagine if Trump was running a public company, you'd have some people that wish you would dominate the entire world. You have others that wish that he would go to jail and that every part of his business Empire would be torn apart by different litigations that come out every single other day. And then you'd have a lot of customers or businesses who do business with you going and being ridiculed by the media for working with you.

This is not the kind of thing that we need at Tesla right? And then there's that Financial Dynamic Where Musk has been raiding Tesla to make things work since first announcing plans to buy Tweeter in April, He has sold around 22.9 billion dollars worth of Tesla stock. in total. since November 2021, Musk has sold 39 billion dollars worth of Tesla stock and this is bite him saying over and over again that he's done selling Tesla stock and a lot of people Overlook The impact that this has on the price. According to SEC filings last week, Musk sold another 22 million shares.

Tesla is averaging around 80 million shares in Daily volume, going back and forth when you're going and dumping tens and tens of millions of shares over and over again. It flips the pendulum even farther even farther in favor of bears and Floors just really start falling out and we've seen that happen all year. And then another problem with Musk is the idea that he's spending all of this time at Twitter and not at Tesla I Think this is probably one of the stupider ideas because Tesla's a massive company and he doesn't need to be present every single day in order to make things work. In fact, if he has to be present, then he's probably failing.

As a businessman, a good figurehead should create systems that execute your vision whether you're there or not, and whether or not this theory has any credibility. The truth is that a lot of investors invested in Tesla for musk and they're getting less and less of musk and he's selling more and more of his own Holdings Not to mention one of the times he saw old Holdings he went and talked up the stock like, right beforehand. Which again, that doesn't bode well with shareholders, right. especially from someone that said he's going to be the first in and last out.

To some extent, it's hard to criticize the man because he's returned so much value to shareholders over the last five years that at some point she just got to tell complainers to shut the hell up. But at the same time, if this is going to be a new headwind for Tesla for the upcoming foreseeable future, then that's a whole new problem. And then of course there's that broader macro issue when the FED raises rates, it makes the risk-free return in bonds and other low to no risk assets higher and more attractive and draws a lot of capital out of the market. If you can get a near five percent return in cash equivalent, no state income tax, treasury bills.

Well, what is the incentive to invest in a market which probably is going to go down another 10 to 20 percent and people say, oh, it's because, well, the bonds and the treasury bills? Well, they don't outpace inflation. Okay, but wait, what outpaced inflation? More treasury bills that return five percent year over year Or the S P which returned negative 20? That's the dynamic that people have to analyze heading into this next year where that might be the situation. And on top of that, the higher the rates, the more likely fund managers are to sideline capital and just keep it invested with the treasury so that they can get a higher Alpha on the rest of the market which is still losing money. And the higher rates go, the more capital is drawn out of the market to those risk-free rates, right? And that goes ahead.

and crunches all the multiples on stocks like Tesla Tesla executes perfectly on the next earnings report next month. Great, But people are less likely to pay the same for that level of revenue for that level of growth for that level of profit than they were just a year ago, Because now they can get risk-free returns elsewhere that I would argue is probably the first or second biggest reason that Tesla stock is down And you can see that very very clearly if you compare Tesla stock to say the QQQ I mean Tesla's down a lot more. but QQQ is still down about 30 percent, right? So I'd say at least a third or at least a half of Tesla's valuation dump is because of that multiple crunch, right? But you also have the economic part which is affecting both triple Q and Tesla Demand for most products, but especially luxury electric vehicles, is going to go down within the next year because people are going to have less money to spend on them. It's pretty basic math: you make people have less money and they spend less well.

They use credit cards first, but then after they've maxed those out, that's already pretty close. After they've maxed them out, they go and they spend less. The car industry overall is declining from stimulated Easy Money highs and it's only going to get worse as people have less and less money to spend. You look at some of Tesla's biggest markets in, say, China which is about 24 percent of Tesla's Q3 Revenue Well, China has largely lifted coveted zero policies, but with very low vaccination and booster rates and very low natural immunity because of all the lockdowns they did have the last few years.

Well, there's a massive surge happening and a lot of people there now are actually self-locking down. If you're in the situation where you're self locking down and worried about getting sick and the economy has been rough for years, your first thought is unlikely to be. Oh, let's go out and buy a luxury for an EV your first thought is going to be how can I survive It's been three years of hell and Chinese business confidence falls to the lowest in almost a decade on covet and the people in these surveys are the ones that are more likely to be able to afford to buy the Teslas in the first place right now. On the flip side, while the overall core sector is going to get smaller and the overall production is going to get smaller across the industry in the next year, there's a lot of reasons to believe that Tesla is still going to dominate the EV sector.

A lot of their competitors are backing down and pushing back their production targets. For example, Toyota CEO just started airing doubts about their commitment to pushing forward solely into EVS GM is also pushing back on their North American production plan for EVS. Look at many of the other companies out there that are saying the same thing and the reason. It's pretty simple: I mean EVS have a much more expensive supply chain to develop and all the infrastructure that you have to build out if you're an ice manufacturer.

if you have to convert that to producing EVS Well, that's a lot of commitment. Well, that's a massive, massive capital and time commitment and resource commitment overall. So when industry demand is going to go down for a year, well, all of a sudden what happens? Well, the company that has all the infrastructure already in place Tesla is going to be able to continue to dominate without much competition, so that's good for tasks. Every inch that these companies push back Tesla can end up taking.

But the main problem that I see is that right now Tesla is a fair weather company, which means that when things are good and the sun is shining, people have money to spend on expensive luxury. Vehicles People have more money to invest in companies that are more futuristic and have a lot more potential over the long run. But when shite hits the fan and when Musk puts a little bit more doubt into the system, well, all of a sudden, that Dynamic shifts very quickly. And to make matters worse, I mean Musk is going to likely have to funnel even more money into Twitter next year from Tesla because advertising tends to do even worse in recessionary environments, right? It's all my thought process.

Well, Tesla stock has a lot more pain to go in the short to medium term. I Would never want to bet against Musk in the long term, but I do think you'll be surprised to see how much farther the stock has to go down before all is said and done. Now, in conclusion: if you want to see Tesla the stock turn around and start booming. there's a few major things that I think you need to see really only three.

I Think number one: you need Musk to find a new CEO that fixes the advertising problem and makes Twitter sustainable at least be flat year over year instead of a massive money loser that forces them to continue selling shares. Number two: I Want Musk to stop selling Tesla shares. Even better, if he can find an investment bank or foreign wealth fund to acquire more of his Twitter Holdings We know he has the connections, especially with certain foreign wealth funds. And of course, most importantly, Number Three.

We need a Fed pivot that reinvigorates the economy that will reinvigorate the multiples that people are willing to pay for Tesla and will stimulate potential consumers. anyways. Make sure to hit that ravishing like button and subscribe and we will see you in the next video.