Should Tesla investors be concerned?

Should Tesla investors be concerned?

elon musk

Tesla investors were also concerned when his predecessor vacated the CFO position. Here’s what happened after that.

Earlier this week, Zach Kirkhorn stepped down from his positions as Chief Financial Officer and “Master of Coin” of Tesla (TSLA) . During Kirkhorn’s 4 1/2 years as CFO, Tesla’s stock price grew more than ten-fold. Kirkhorn has been replaced by Vaibhav Taneja, the company’s chief accountant.

No reason was given for Kirkhorn’s departure, and that fact has made some investors uncomfortable. Shares of Tesla fell by about 1% on Monday, despite a strong rally in the major indexes, and are down again Tuesday.

Should investors be concerned about Tesla, or is Kirkhorn’s departure just another footnote in the company’s history?

Some have expressed concern that Kirkhorn is leaving Tesla at a critical time, since Tesla is building a new gigafactory in Mexico and is preparing for the introduction of the Cybertruck.

I’d counter that these developments are business as usual. The EV automaker opened two gigafactories last year, in Berlin, Germany and Austin, Texas. Including Cybertruck, Tesla has introduced a total of six new vehicle models since the Roadster made its debut in 2008.

I’d like to point out that Tesla investors were also concerned when Kirkhorn’s predecessor vacated the CFO position. Tesla shares dipped when Deepak Ahuja left the company in 2019, but those concerns evaporated as the stock exploded higher under Kirkhorn’s tenure.

Perhaps the frequent departures of top officials at Tesla are reflective of the company’s culture. At Tesla, as with all of Elon Musk’s companies, you’re expected to work hard. That can lead to burnout.

You’re also expected to become wealthy. Kirkhorn’s Tesla shares are estimated to be worth about $49 million. Perhaps the fact that he accumulated that much wealth prior to turning 40 influenced his decision.

While I don’t believe Kirkhorn’s departure is indicative of trouble at Tesla, shareholders might experience a bumpy ride in the near term. Over the past two months, a small rounded top pattern has emerged on Tesla’s chart (curved black line).

This pattern indicates that Tesla shares could visit the low $200’s in the near term. Keep in mind that Tesla is up 104% year-to-date, so a pullback shouldn’t cause undue concern.

Why is Tesla forming a mildly bearish pattern? The answer might be found in economic data from China.

Earlier this week, China reported that exports fell by 14.5% in July, and imports fell by 12.4%. Last week, China’s manufacturing PMI (purchasing managers’ index) showed contraction for the fourth consecutive month.

These figures point to economic weakness within China, which in turn could have a negative affect on Tesla. China is estimated to account for about 40% of Tesla’s sales.

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