Tesla stock has plummeted since CEO Elon Musk took over Twitter, falling more than 45% in about over two months.
In all, the company's stock has dropped more than 65% since January, when Musk began investing in Twitter. By comparison, the tech-heavy Nasdaq has fallen about half as far over that period.
Musk said on Tuesday that he will resign as head of Twitter when the company identifies a successor. The news temporarily buoyed Tesla stock before it again turned downward.
The electric vehicle company faces falling demand amid recession fears, heightened competition and pandemic-induced production challenges.
Moreover, some analysts and major investors have sharply criticized Musk over a perceived lack of focus on Tesla, saying the company needs leadership as it contends with an adverse business environment.
"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," Dan Ives, a longtime Tesla bull and managing director of equity research at Wedbush, said in a research note on Thursday.
"Instead Musk is laser focused on Twitter which has been an ongoing nightmare that never ends for investors, with hopes a new CEO is picked in the coming weeks as a first step forward," Ives added.
Tesla did not immediately respond to a request for comment.
Aside from investor concerns over Musk, the company's stock losses owe in part to insurgent rivals and diminished demand.
Tesla remains the top-selling electric vehicle company in the U.S., but its lead has slipped in recent months as competitors offer a host of affordable alternatives, a S&P Global Mobility report showed last month.
The company held 65% market share of new registered vehicles in the U.S. through the third quarter of this year, a drop from 71% last year and 79% in 2020, the report found.
Responding to weakened demand, Tesla announced on Wednesday that it would offer $7,500 discounts on Model 3 and Model Y vehicles delivered in the U.S. this month. Shares in Tesla fell by nearly 9% the following day.
Still, significant investor attention has focused on Musk and his apparent focus on Twitter.
The world's richest person has sold nearly $40 billion worth of Tesla stock since late last year, including a $3.6 billion sale as recently as last week, as he has financed the acquisition of Twitter.
The sales have reduced the stake Musk holds in Tesla, raising questions about his continued level of involvement with the company.
Some major Tesla investors have called for Musk to place his primary focus on Tesla, which boasts a market capitalization of $392 billion, far larger than the value of Twitter, for which Musk spent $44 billion.
"I think it is in the best interest for Tesla shareholders for Elon to be back at Tesla working full time," Ross Gerber, CEO of Gerber Kawasaki Wealth & Investment Management, tweeted on Sunday.
For his part, Musk has defended his actions at Twitter as part of an aggressive effort to rescue the company from financial peril, which he described in a Twitter Spaces interview on Tuesday as an "emergency fire drill."
"That's the reason for my actions," he added. "They may seem sometimes spurious or odd or whatever."
In a Twitter Spaces interview on Thursday, Musk vowed to stop selling Tesla stock until at least 2024, though he has previously violated commitments to halt sales of the stock. He added, meanwhile, that he hadn't missed "a single important Tesla meeting" since acquiring Twitter.
Musk also said on Thursday that he expects the economy to fall into a "serious recession" next year, further slashing demand for expensive items.
To be sure, this year has pummeled automakers across the sector. Shares of Ford have plummeted 45% in 2022; while General Motors has fallen 43% and Toyota has dropped 26%.
Interest rate hikes at the Federal Reserve have spiked borrowing costs, making car purchases more difficult for consumers already strained by sky-high inflation. Meanwhile, pandemic-induced production bottlenecks and chip shortages have persisted, increasing costs and causing delivery delays.
In recent months, falling consumer sentiment has placed added pressure on the industry.
Despite these headwinds, Tesla can stanch its financial bleeding and turn around its business, said Ives, of Wedbush Securities.
He attributed roughly 70% of Tesla's stock decline in recent months to Musk's focus on Twitter, and urged Musk to return his attention to the company and stop selling Tesla stock.
"Taking a step back, the long term Tesla transformational story remains intact," Ives said, adding that he expects global electric vehicle demand to significantly accelerate over the coming years.
Tesla, he said, is the "clear leader poised to benefit front and center."