Tag Archives: finance and investments

Business

Shell posts profit of nearly $40 billion and announces $4 billion in buybacks

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Hong Kong/London
CNN
 — 

Shell made a record profit of almost $40 billion in 2022, more than double what it raked in the previous year after oil and gas prices soared following Russia’s invasion of Ukraine.

Europe’s largest oil company by revenue reported adjusted full-year earnings of $39.9 billion on Thursday — more than double the $19.3 billion it posted in 2021 — driven by a strong performance in its gas trading business. The company’s stock was up 1.7% in London.

The company reported $9.8 billion in profit in the fourth quarter. Just over 40% of Shell’s full-year earnings came from its integrated gas business, which includes liquified natural gas trading operations.

Shell CEO Wael Sawan said the results “demonstrate the strength of Shell’s differentiated portfolio, as well as our capacity to deliver vital energy to our customers in a volatile world.”

The earnings are the latest in a series of record-setting results by the world’s biggest energy companies, which have enjoyed bumper profits off the back of soaring oil and gas prices.

ExxonMobil this week posted record full-year earnings of $59.1 billion. Last month, Chevron

(CVX) reported a record full-year profit of $36.5 billion.

That has led to renewed calls for higher taxation. Governments in the European Union and the United Kingdom have already imposed windfall taxes on oil company profits, with the proceeds used to help households struggling with rising energy bills.

Shell said it expected to pay an additional $2.3 billion in tax related to the EU windfall tax and the UK energy profits levy. The company paid $13 billion in tax globally in 2022.

Shell

(RDSA) also announced another $4 billion share buyback program and confirmed it would lift its dividend per share by 15% for the fourth quarter.

— This is a developing story and will be updated.

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Technology

In Japan, pet fish playing Nintendo Switch run up bill on owner’s credit card

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CNN
 — 

Here’s something you don’t see everyday. Pet fish playing a video game in Japan managed to log on to the Nintendo Switch store, change their owner’s avatar, set up a Pay Pal account and rack up a credit card bill.

And it was all seemingly livestreamed, in real time, on the internet.

The fish in question belong to a YouTuber known as Mutekimaru, whose channel is popular with the gaming community for its videos featuring groups of tetra fish that “play” video games.

Mutekimaru had previously installed sophisticated motion detection tracking software in fish tanks, enabling the fish to remotely control a Nintendo Switch console.

But the technology, and the fishes’ apparent mastery of it, led to an unexpected turn of events earlier this month while Mutekimaru was live-streaming a game of Pokémon.

Mutekimaru had stepped away for a break when the game crashed due to a system error and the console returned to the home screen.

But the fish carried on swimming, like fish tend to do, and seemingly continued to control the console remotely from their tank.

During the next seven hours, the fish reportedly managed to change the name of their owner’s Switch account before twice logging into the Nintendo store, where users can purchase games and other downloadable content.

They also managed to “check” legal terms and conditions, downloaded a new avatar and even set up a PayPal account from the Switch – sending an email out to their owner in the process, video from the livestream appeared to show.

But things didn’t end there. The fish were also seen adding 500 yen ($4) to Mutekimaru’s Switch account from his credit card during the livestream – exposing his credit card details in the process, the YouTuber revealed in a follow-up video about the episode.

By this point, thousands of comments were streaming in as viewers watched the unintended takeover being livestreamed on the channel, and the incident went viral on Twitter, where thousands of Japanese users shared their amusement.

Mutekimaru later said that he had contacted Nintendo to explain what happened and asked for a refund of his 500 yen.

Nintendo declined to comment to CNN, citing customer confidentiality.



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Business

Gautam Adani’s business loses $50 billion in market value after short seller report

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New Delhi
CNN
 — 

The value of Gautam Adani’s business empire has crashed by more than $50 billion this week since Hindenburg Research, a US firm that makes money from short selling, published a blistering report accusing it of fraud.

India’s Adani Group has denounced Hindenburg’s allegations as “baseless” and “malicious,” and it is considering legal action. But the sharp sell-off in shares, which began Wednesday, accelerated Friday after US hedge fund billionaire Bill Ackman said he found the short seller’s report credible.

Hindenburg Research published an investigation on Adani’s conglomerate late on Tuesday, accusing it of “brazen stock manipulation and accounting fraud scheme over the course of decades.” It said it had taken a short position in Adani Group companies, meaning it would benefit from a drop in their value.

Shares of those companies — some of which had surged over 500% in the last few years — plunged when India’s stock market opened Wednesday. The rout resumed Friday when trading resumed following a market holiday on Thursday.

Shares of Adani Transmission, Adani Total Gas and Adani Green Energy — three of the group’s seven listed companies — were down 20% each on Friday, while shares of Adani Enterprises, the conglomerate’s flagship company, fell 18%. Friday’s losses wiped out almost $39 billion in market value.

According to the Bloomberg Billionaires Index, Adani is still Asia’s richest man with a personal fortune worth $113 billion, $30 billion more than fellow Indian entrepreneur Mukesh Ambani. Friday’s losses will reduce that gap.

Hindenburg said Thursday that it stood fully by its report and believed any legal action would be “meritless.”

“If Adani is serious, it should also file suit in the US where we operate. We have a long list of documents we would demand in a legal discovery process,” the short seller said in a post on Twitter.

Hindenburg isn’t the first research firm to express concern about the finances of Adani’s sprawling empire, which has borrowed $30 billion to become established in industries ranging from logistics to mining, and is aggressively growing in diverse sectors such as media, data centers, airports and cement.

Ackman weighed into the debate on Twitter Thursday, saying he found the Hindenburg investigation “highly credible and extremely well researched.”

“We are not invested long or short in any of the Adani companies … nor have we done our own independent research,” Ackman added.

Hindenburg’s claims come at a sensitive time. Adani Enterprises is aiming to raise 200 billion rupees ($2.5 billion) by issuing new shares this month. The offer will close on Tuesday.

A college dropout and a self-made industrialist, Adani is the world’s fourth richest man, ahead of Bill Gates and Warren Buffet. He is also seen as a close ally of India’s prime minister, Narendra Modi.

The 60-year old tycoon founded the Adani group over 30 years ago.



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Business

Gautam Adani slams short-seller Hindenburg’s claims as ‘baseless’ and ‘malicious’

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New Delhi
CNN
 — 

India’s Adani Group on Wednesday denounced allegations of fraud made by US-based short seller Hindenburg Research as “baseless” and a “malicious combination of selective misinformation.”

Hindenburg Research published an investigation on billionaire Gautam Adani’s sprawling conglomerate on Tuesday, accusing it of “brazen stock manipulation and accounting fraud scheme over the course of decades.”

Hindenburg said it has taken a short position in companies in the Adani Group “through U.S.-traded bonds and non-Indian-traded derivative instruments.” Short sellers aim to make money by betting that the stock price of the companies they target will fall.

Adani’s business empire contains seven listed companies — in sectors ranging from ports to power stations — and shares in most of them fell by between 3% and more than 8% on Wednesday.

The plunge had an immediate impact on the billionaire’s net worth. According to Bloomberg’s Billionaires Index, Adani lost nearly $6 billion on Wednesday. He is currently worth $113 billion.

In its investigation, which Hindenburg said took two years to compile, the research firm questioned the “sky-high valuations” of Adani firms and said their “substantial debt” puts the entire group “on a precarious financial footing.”

The research firm concluded its report with 88 questions for the Adani Group. These range from asking for details on Adani’s offshore entities, to why it has “such a convoluted, interlinked corporate structure.”

CNN has not verified the claims in the report, and India’s stock market regulator did not immediately respond to a request for comment.

Shares of Adani’s companies have surged in the last few years, making him Asia’s richest man.

In a statement released a few hours after Hindenburg published its report, the Adani Group’s chief financial officer Jugeshinder Singh said that Hindenburg did not make “any attempt to contact us or verify the factual matrix,” adding that the allegations made by the short seller are “stale, baseless and discredited.”

The conglomerate has faced scrutiny from Indian authorities in the past. In 2021, shares in Adani’s companies tumbled after The Economic Times newspaper said that foreign funds that hold stakes worth billions of dollars were frozen by the country’s National Securities Depository. The Adani Group called that report “blatantly erroneous.”

Nate Anderson, who founded Hindenburg Research, has made a name for himself in the past few years by targeting companies that he thinks are overvalued and have suspect financials. Anderson is best known for going after electric truck company Nikola in 2020, calling it an “intricate fraud,” and causing the firm’s stock to plunge sharply. In 2022, Nikola’s founder was convicted by a US jury of fraud in a case alleging he lied to investors about the company’s technology.

But some have accused Hindenburg of trying to push stocks lower with its research reports in order to make a profit.

Its report on the Adani Group comes at a sensitive time. Later this week, Adani Enterprises, the conglomerate’s flagship company, is aiming to raise 200 billion rupees ($2.5 billion) by issuing new shares.

Singh said that the “timing of the report’s publication clearly betrays a brazen, mala fide intention to undermine the Adani Group’s reputation with the principal objective of damaging the upcoming follow-on public offering.”

The conglomerate is also considering taking five new businesses to the stock market in the next two to five years.

A college dropout and a self-made industrialist, Adani is the world’s fourth richest man, ahead of Bill Gates and Warren Buffet, according to Bloomberg’s Billionaires Index. He is also seen as a close ally of India’s current prime minister, Narendra Modi.

The 60-year-old tycoon founded the Adani group over 30 years ago. It now has established businesses in industries ranging from logistics to mining, and is aggressively growing in diverse sectors such as media, data centers, airports, and cement.

But this is not the first time analysts have expressed fear that the rapid expansion of his business comes with a huge risk. Adani’s juggernaut has been fueled by a $30 billion borrowing binge, making his business one of the most indebted in the country.

Last year, CreditSights, a research firm owned by Fitch Group, published a report about Adani Group titled “Deeply Overleveraged” in which it expressed strong concerns about its debt-funded growth plans.

Adani Group responded to CreditSights with a 15-page report, saying that the “leverage ratios” of its companies “continue to be healthy and are in line with the industry benchmarks in the respective sectors” and that they “have consistently de-levered” in the last nine years.

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Business

Jack Ma to relinquish control of Ant group

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CNN
 — 

Chinese billionaire Jack Ma will no longer control Ant Group after the fintech giant’s shareholders agreed to reshape its shareholding structure, according to a statement released by the company on Saturday.

After the adjustment, Ma’s voting rights will fall to 6.2%, according to the statement and CNN calculations.

Before the restructure, Ma held 50.52% of voting rights at Ant via Hangzhou Yunbo and two other entities, according to its IPO prospectus filed with stock exchanges in 2020.

Ant added in the statement that the voting rights adjustment, a move to make the company’s shareholder structure “more transparent and diversified,” will not result in any change to the economic interests of any shareholders.

Ant said its 10 major shareholders, including Ma, had agreed to no longer act in concert when exercising their voting rights, and would only vote independently, and thus no shareholder would have “sole or joint control over Ant Group.”

The voting rights overhaul came after Chinese regulators pulled the plug on Ant’s $37 billion IPO in November 2020, and ordered the company to restructure its business.

As part of the company’s restructuring, Ant’s consumer finance unit applied for an expansion of its registered capital from $1.2 billion to $2.7 billion. The China Banking and Insurance Regulatory Commission recently approved the application, according to a government notice issued late last week.

After the fund-raising drive, Ant will control half of its key consumer finance unit, while an entity controlled by the Hangzhou city government will own a 10% stake. Hangzhou is where Alibaba and Ant have been headquartered since their inceptions.

Ant Group is a fintech affiliate of Alibaba, both of which were founded by Ma.

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Business

SEC closes insider trading probe into former Republican senator

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CNN
 — 

The US Securities and Exchange Commission has closed its insider trading investigation into stock trades made by then-Sen. Richard Burr and his brother-in-law at the outset of the pandemic, the former senator announced Friday.

“This week, the SEC informed me that they have concluded their investigation with no action. I am glad to have this matter in the rearview mirror as I begin my retirement from the Senate following nearly three decades of public service,” Burr, a North Carolina Republican, said in a statement.

The announcement comes nearly two years after the Justice Department closed its own review of the matter, which was launched in March 2020, soon after questionably timed trades by Burr and other lawmakers became publicly known.

Burr sold $1.65 million in stock on February 13, 2020, previous court filings by the SEC revealed. The sales included tens of thousands of dollars in stock in the hospitality industry, which was particularly hard hit in coronavirus outbreak.

The SEC declined CNN’s request for comment.

The trades made by Burr and his brother-in-law first attracted scrutiny because of Burr’s position on Senate committees overseeing health policy and US intelligence. The Intelligence Committee, which Burr chaired at the time, had received periodic briefings on the coronavirus as the outbreak began to spread but it did not receive such a briefing the week of the trades.

The SEC previously said Burr possessed “material nonpublic information concerning Covid-19 and its potential impact on the U.S. and global economies.”

In the DOJ’s probe of the stock trade, Burr turned over his official Senate phone to the FBI after a warrant was served, an official confirmed to CNN at the time. Use of the warrant had been signed off at the highest levels of the Justice Department, as is protocol, according to the source.

The Senate-issued cellphone was Burr’s primary device and investigators had asked Apple for information from Burr’s iCloud backup, a person familiar with the investigation previously said.

Burr had consistently denied any wrongdoing, saying he made the trades based solely on public information, not information he received from the committee.

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Business

Alan Greenspan says US recession is likely

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New York
CNN
 — 

Former Federal Reserve Chairman Alan Greenspan believes a US recession is the “most likely outcome” of the Fed’s aggressive rate hike regime meant to curb inflation. He joins a growing chorus of economists predicting imminent economic downturn.

His views are particularly important. Not only did Greenspan serve five terms as Fed chair under four different presidents between 1987 and 2006, but he was the last chair to successfully navigate a soft landing, in 1994. In the 12 months that followed February 1994 Greenspan nearly doubled interest rates to 6% and managed to keep the economy steady, avoiding recession.

Greenspan, now 96, said in a note this week that he doubts this current bout of hikes will result in a repeat performance.

The last two months of data showed that prices are beginning to decelerate – good news but not good enough, he said. “I don’t think it will warrant a Fed reversal that is substantial enough to avoid at least a mild recession,” said Greenspan, now a senior economic adviser to Advisors Capital Management, in commentary released on the company’s website Tuesday.

The Fed hiked interest rates seven times last year, increasing the rate that banks charge each other for overnight borrowing to a range of 4.25%-4.5%, the highest since 2007. Fed officials still expect to raise rates by another percentage point, according to projections released during their December monetary policy meeting.

Wage increases and, by extension, employment, “still need to soften further for a pullback in inflation to be anything more than transitory,” said Greenspan. “So we may have a brief period of calm on the inflation front, but I think it will be too little too late.” Unemployment rates remain near historic lows, holding at 3.7% in November. New employment data is set to be released Friday morning.

Greenspan doubts the Fed will loosen interest rates soon because “inflation could flare up again and we would be back at square one,” he said. “Furthermore, this could potentially damage the Federal Reserve’s credibility as a purveyor of stable prices, especially if the action were seen to be taken merely to protect the stock market rather than in response to truly unstable financial conditions.”

He does see some good news for investors on the horizon. Markets won’t be nearly as chaotic in 2023 as they were last year, he said. “I believe 2022 would be a tough year to top with respect to market volatility,” he remarked.

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Business

FTX founder Sam Bankman-Fried arrives in court to face charges

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New York
CNN
 — 

Sam Bankman-Fried, the disgraced founder of bankrupt crypto exchange FTX, has arrived at a Manhattan federal court where he is set to appear to face charges that include cheating investors out of billions of dollars.

Authorities have accused Bankman-Fried of stealing customer funds from FTX to cover loans taken out by Alameda Research, FTX’s affiliated crypto hedge fund. They also say he used those funds to make investments in other companies and donate to campaigns of politicians from both parties to influence public policy.

In public statements following FTX’s collapse in November, Bankman-Fried has insisted that he didn’t commit fraud and was unaware that customer funds were being used improperly.

He is expected to plead not guilty Tuesday.

Two senior executives from Bankman-Fried’s crypto businesses — Gary Wang, the co-founder of FTX, and Caroline Ellison, who served as Alameda’s CEO — have pleaded guilty to multiple criminal charges and are cooperating with federal prosecutors.

Ellison apologized while entering her plea last month, telling the court that she “agreed with Mr. Bankman-Fried and others to not publicly disclose the true nature of the relationship between Alameda and FTX, including Alameda’s credit arrangement.”

As part of his release, Bankman-Fried is under house arrest at his parents’ home in Palot Alto, California. He is wearing a monitoring device and has surrendered his passport.

He could face up to 115 years in prison if convicted on all charges.

Last month, a US judge released him on a $250 million bond in his first appearance on American soil since his arrest in the Bahamas, where he lived and ran his businesses.

Bankman-Fried’s parents, both law professors at Stanford who co-signed his bond, have “become the target of intense media scrutiny, harassment, and threats,” defense lawyers wrote in a letter to the court, while asking to redact the names of two other co-signers, known as “sureties.”

“There is serious cause for concern that the two additional sureties would face similar intrusions on their privacy as well as threats and harassment if their names appear unredacted on their bonds or their identities are otherwise publicly disclosed,” the letter states.

Prosecutors allege that Bankman-Fried orchestrated “one of the biggest financial frauds in American history,” stealing billions of dollars from FTX customers to cover losses at its sister hedge fund, Alameda Research.

FTX and Alameda both filed for bankruptcy in December after investors rushed to pull their deposits from the exchange, sparking a liquidity crisis and triggering contagion across the crypto industry.

FTX’s new CEO, John Ray III, who made his name overseeing the liquidation of Enron in the early 2000s, said in a congressional hearing that customer funds deposited on the FTX site were commingled with funds at Alameda, which made a number of speculative, high-risk bets.

Ray described the situation at the two companies as “old-fashioned embezzlement” at the hands of a small group of “grossly inexperienced and unsophisticated individuals.”

— CNN’s Allison Morrow and Samantha Murphy Kelly contributed to this report.

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US

Unanswered questions about Trump’s tax returns

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New York
CNN
 — 

After years of legal battles, pontificating and theorizing, former President Donald Trump’s tax returns from 2015 to 2020 are now part of the public record. Many critics and political opponents have theorized that Trump fought the public disclosure of his tax returns because they potentially provided evidence of illegal or politically damaging behavior.

It’s not immediately clear that they do either.

However, Trump’s tax returns raise numerous questions about the former president’s finances, his business activities, foreign ties and his charitable donations, among other issues.

Trump broke with decades of tradition in becoming the first elected president since Nixon to refuse to disclose his tax returns to the public When Democratic lawmakers demanded them, Trump fought for years to keep them private, taking the battle to the Supreme Court – a legal fight he ultimately lost.

He frequently claimed during his 2016 presidential candidacy that he couldn’t release his taxes because they were being audited, a claim that was debunked last week when the House Ways and Means Committee disclosed that Trump’s 2015 and 2016 taxes weren’t audited until 2019.

For now, the thousands of pages of documents offer only more questions about what Trump’s finances, and may offer potential avenues for new investigations.

Trump reported having foreign bank accounts, including a bank account in China between 2015 and 2017, his tax returns show.

The tax returns do not show what the bank account was used for or how much money passed through it or to whom. The New York Times first reported about Trump’s Chinese account in 2020, and Trump Organization lawyer Alan Garten told the Times that the account was used to pay taxes on the Trump International Hotels Management’s business push in the country.

Trump did not report the Chinese bank account in personal financial disclosures when he was president, likely because it was listed under his businesses. Yet he may have still been required to report accounts to the Financial Crimes Enforcement Network (FinCEN).

Trump’s companies and business interests span the globe. On his tax return, Trump listed business income, taxes, expenses or other notable financial items from or in Azerbaijan, Panama, Canada, India, Qatar, South Korea, the United Kingdom, China, the Dominican Republic, United Arab Emirates, the Philippines, Grenada, US territory Puerto Rico, Georgia, Israel, Brazil, St. Maarten, Mexico, Indonesia, Ireland, Turkey and St. Vincent.

But the tax returns don’t explain what business ties he had in those countries and with whom he might have been working while he was president.

Unlike previous presidents, Trump declined to divest his business interests while he was in office. Critics said his many foreign holdings compromised his ability to act independently as a politician.

During his presidency, Trump pledged he would donate the entirety of his $400,000 salary to charity each year. He frequently boasted about donating parts of his quarterly paycheck to various government agencies.

If he donated his 2020 salary, he didn’t claim it on his taxes. Among the six years of tax returns the House Ways and Means Committee released, 2020 was the sole year in which Trump listed no donations to charity.

That doesn’t mean his salary wasn’t donated, but it’s unclear if he made good on his promise in 2020.

In each year of Trump’s presidency, Trump claimed that he had loaned three of his adult children – Ivanka, Donald Jr. and Eric – undisclosed sums of money on which he collected interest.

The tax returns don’t say how much he lent them or why he gave them loans in the first place.

Between 2017 and 2020, Trump claimed he received exactly $18,000 in interest on a loan he gave his daughter Ivanka Trump and $8,715 in interest from his son Donald Trump, Jr.. In 2017 to 2019, Trump said he received exactly $24,000 from his son Eric Trump, and Eric paid him $19,605 in interest in 2020.

The bipartisan Joint Committee on Taxation said the loans and the amounts of claimed interest could indicate Trump was disguising gifts to his children. If the interest Trump claims to have charged his children was not at market rate, for example, it could be considered a gift for tax purposes, requiring him to pay a higher tax rate on the money.

Trump entered the US presidency with a vast web of business holdings, including hundreds of limited liability companies, corporations and partnerships with operations both domestically and overseas.

The massiveness and intricacy of his business operations – including companies nested within each other like Matryoshka dolls – brought a level of complexity not seen before in the US presidency and spurred concern about potential conflicts of interest, especially with foreign entities.

Friday’s public release of Trump’s 2015 to 2020 personal and business tax filings may shed some additional light as to how those operations evolved during and shortly after his time in office. But they don’t spell out where money was going and to whom.

Since 1977, the Internal Revenue Service has had a policy of auditing every president’s personal tax returns while they are in office. But the IRS didn’t do any examination of Trump’s tax returns until the Ways and Means Committee requested an audit in April of 2019.

When the committee asked Treasury Department representatives about the apparent lapse, they declined to provide information about the actual operations of the mandatory audit program, according to the committee’s report.

It remains unclear whether Trump received special treatment or, as the committee noted, the IRS was hamstrung by an acute lack of resources.

The lack of an audit looks especially suspect after representatives for Trump’s predecessor and successor said they had been subjected to annual audits by the IRS. A Biden White House spokesman told the AP that the IRS audited Biden in both 2020 and 2021. Representatives for former President Barack Obama told the New York Times that the IRS audited him each year he was in office.

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Business

Tesla shares are down 70% for the year

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New York
CNN
 — 

Tesla’s stock is finishing out its tumultuous year with yet more turbulence: It’s up almost 6% Thursday, but still down more than 10% since last week. And a new cut to its price target from Morgan Stanley isn’t helping.

Year-to-date, the stock is down about 70%. Morgan Stanley analysts on Thursday said that the company’s sliding stock price represents a buying opportunity, but they cut its price target from $330 per share to $250. Tesla shares are trading at $122, with the stock up about 8% Thursday.

Morgan Stanley still believes the company is somewhat undervalued as a result of the big recent sell-offs, citing its head start over the electric car competition, and potential tax advantages as a result of the Inflation Reduction Act passed earlier this year.

The losses, however, have further put a dent in the fortunes of one of the world’s richest people. According to the Bloomberg Billionaires Index, CEO Elon Musk is now worth $132 billion — less than half what he was worth at the beginning of the year. He lost the world’s richest person title two weeks ago to Bernard Arnault, the chairman of French luxury goods giant LVMH

(LVMHF).

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

Even as Musk signals he may give up his CEO title at Twitter, investors became concerned that the outlook for Tesla’s sales and profit is taking a turn for the worse. A sign of the weakening demand: Tesla has announced a rare sale. The company offered two rebates for buyers who take delivery of a vehicle before the end of the year, initially offering a $3,750 discount earlier this month. Tesla then doubled that rebate to $7,500 last Thursday.

“Tesla clearly is starting to see demand cracks in China and in the US at a time that EV competition is increasing across the board,” said Dan Ives, tech analyst with Wedbush Securities and a Tesla bull who cut his price target for the stock last Friday from $250 to $175. “The price cuts that Tesla enacted was the straw that broke the camel’s back on the stock.”

Another reason Tesla’s stock is sinking: The US economy could tip into recession next year, hurting car sales. Musk said on a Twitter Spaces call two weeks ago that he foresees the economy will be in a “serious recession” in 2023.

“I think there is going to be some macro drama that’s higher than people currently think,” he said, according to Reuters, adding that homes and cars will get “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 largest automakers on the planet combined, despite having a fraction of the sales of any of them. Today it is worth $399 billion.

“It got ahead of itself in the near-term,” said Gene Munster of Loup Ventures, another Tesla fan. “I still believe this can be a much bigger company. I think it will see those kinds of numbers again. But it could take a long, long time to get there.”

Tesla’s growth prospects – a target of 50% sales growth annually, helped drive that valuation. It conceded in October that it will miss that sales target for this year.

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

“Tesla was viewed as a disruptive technology company, not as an automaker, and a large part of that premium is related to Musk,” said Ives.

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

A prime example is the Cybertruck, the Tesla pickup truck, first unveiled three years ago with promises that production would start in 2021.

Now production is slated to start next year, with a ramp-up in production in 2024, putting it years behind other electric pickup offerings from Ford and upstart EV maker Rivian, both of which have electric pickups available for purchase today. It could also trail planned electric pickup offerings from General Motors.

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

Johnson said Tesla shares will have a much steeper fall ahead, once it starts being priced like other automakers rather than on its promises. He said that for Tesla to hit its growth targets it needs to be building new plants almost every year, but that new factories in Germany and Texas that opened in spring are still not operating at full capacity. And he said that its plant in China has had to scale back production due to weak sales in the market in the face of the Covid restrictions.

“Demand in the US has collapsed,” he said. “Two months ago, your wait time was two or three months. Now you can get one immediately. They’re going to build more cars than they sell for a third straight quarter. It’s the definition of excess capacity.”

Tesla is still by far the largest EV maker worldwide, although that title is being challenged in some key markets, by Volkswagen in Europe and by BYD in China. And more competition is coming from established automakers such as Ford and GM.

That’s not to say Twitter has played no role in Tesla’s stock price demise this year: Tesla shares have lost over 65% of their value since Musk’s interest in Twitter was first disclosed in April, with a nearly 50% decline since he closed on the deal in late October.

Investors have been disappointed that Musk appears to be paying for so much of his $44 billion purchase of Twitter by selling Tesla stock. Musk, Tesla’s largest shareholder, has sold $23 billion worth of Tesla shares since his interest in Twitter became public in April.

On a Twitter Spaces call last week call, Musk promised he was done selling shares of Tesla

(TSLA) stock until at least 2024, if not beyond. But he hasn’t lived up to a previous promise in April that he was done selling Tesla

(TSLA) shares, selling $14.4 billion of that stock since that time.

“It’s been a Pinocchio situation for Musk saying he is done selling stock. Investors want to see him walk the walk and not just talk the talk,” said Ives.

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