When a company undergoes a year of strong volatility and questionable leadership decisions, it’s natural for its reputation to suffer. That’s exactly what has happened to Tesla (NASDAQ:TSLA) and TSLA stock over the course of the past year.
Not long ago, the automaker held an undisputed place at the top of the electric vehicle (EV) race. Experts marveled over how far it could go. That changed in 2022, though, when CEO Elon Musk announced plans to acquire and take Twitter private. TSLA stock struggled as a result, causing investors to wonder about the company’s future and quickly draining their confidence in Musk.
It doesn’t take an in-depth economic analysis to learn that Tesla’s reputation suffered after Musk shifted his focus to Twitter, particularly because the social media platform has only seemed to make negative headlines under his leadership. But as it turns out, Tesla’s brand has taken an even bigger hit than many may have assumed. Recently, Axios reported on its 2023 Harris Poll 100 brand reputation survey. Tesla hasn’t just suffered brand value losses; it has been placed alongside FTX in terms of its “reputational hit” — the worst name in the financial sector with which to be compared.
Here’s what investors should know.
Like Tesla’s Brand, TSLA Stock Is Falling
Last year, FTX shook the entire crypto world when the firm collapsed on allegations of fraud. With everything that happened, it’s unsurprising that the fallen company ranks 99 out of 100 on Axios’ brand reputation list.
FTX took one of the year’s biggest hits. But so did Tesla. As Axios highlights, CEO Elon Musk’s actions at Twitter haven’t just pushed TSLA stock down — they’ve helped tank the reputation of both companies. The outlet reports:
“Twitter ranked 97th among the 100 brands survey respondents identified as most visible in the country today. Its Reputational Quotient [RQ] score — a measure across seven dimensions touching on character, trust and trajectory — was 59.3 out of a possible 100 […] Tesla saw one of the biggest reputation drops of the past year, from 11th in 2022 to 62nd place this year, with a 74.3 RQ (79.5 in 2022).”
Plenty of experts agreed that Musk taking over Twitter would sink TSLA stock. However, they likely didn’t predict this type of damage to the EV maker’s brand. If the company had gotten off to a strong start in 2023, that might have helped. However, when Tesla reported first-quarter earnings last month, it also missed Wall Street estimates.
This further highlights the damage Musk has inflicted on the company. To add insult to injury, two of the EV leader’s rivals saw their reputational rankings improve this year. Ford (NYSE:F) and General Motors (NYSE:GM) both moved up on the list, as did other automakers. That further indicates that Tesla is losing market share as the competition closes in. Consumers are clearly leaning away from Tesla — and are likely to continue to do so as other EV producers provide affordable alternatives.
The Road Ahead
Back in April, InvestorPlace posed an important question: Does Tesla need a new CEO? Developments like Axios’ recent reputational rankings list further strengthen the argument for a leadership shakeup. Musk has damaged Tesla in ways that will be hard to recover from, especially as competition mounts across the EV sector. When you find yourself in the same sentence as FTX, it’s clear that rock bottom isn’t far behind.
Elon Musk’s attempts to save Tesla and push TSLA stock up haven’t worked so far this year. Now, investors have even less reason to trust in the CEO.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.