From ‘fanboy’ to critic: Why Singapore-based billionaire Leo KoGuan and others are losing faith with Elon Musk’s Tesla leadership

TESLA’S WOES

From Oct 27, when Musk bought Twitter and appointed himself CEO, to Dec 13, Tesla’s share price dropped by 28 per cent. 

On Dec 24, Tesla also announced the suspension of its production plant in Shanghai.

While Tesla did not provide a reason for the sudden suspension, the news comes after a surge of infections after China loosened its zero-COVID policy. 

In an interview with people onsite at the plant, Reuters reported that workers at Tesla and its suppliers have been falling sick as part of the wave, posing challenges to operations in the past week. 

The wave of COVID-19 infections are unlikely to ease soon, with provinces like Zhejiang, situated near Shanghai, experiencing a million daily cases with the numbers expected to double, according to the provincial government on Dec 25.

The Shanghai factory, the most important manufacturing hub for Tesla, already had plans to suspend Model Y production from Dec 25 to Jan 1. 

Production at the plant will also slow down next month. Tesla will run production from Jan 3 to Jan 19, and will stop electric vehicle output from Jan 20 to Jan 31.

With a fall in demand for electric vehicles in China, Tesla is offering an additional incentive for buyers earlier this month in an attempt to raise sales. 

Analysts have called on Musk to refocus on Tesla, whose stock price remains his main source of wealth. 

Wedbush Securities analyst Dan Ives told financial website TheStreet earlier this week: “At the same time that Tesla is cutting prices and inventory is starting to build globally in face of a likely global recession, Musk is viewed as ‘asleep at the wheel’ from a leadership perspective for Tesla at the time investors need a CEO to navigate this Category 5 storm.”

BEARISH INVESTORS REAPING REWARDS

The issues surrounding Tesla has, however, been a boon for bearish investors. 

It has become the third most shorted stock in dollar value after Apple and Microsoft, according to financial analytics firm S3 Partners.

Short selling, which is when investors borrow shares to sell them on the open market in the hope of buying them back at a cheaper price and pocketing the difference, is up by more than 8.98 million shares this year due to a drop in the stock price.

Tesla short sellers stand to book a profit of US$16.94 billion, their first gain since at least 2016, compared with a US$10.26 billion loss last year.