Tesla’s stock price fell more than 10 percent Friday morning, adding to steady losses over the past month that wiped out about a third of the automaker’s market value on concerns about falling sales.
After catching up on some of those losses, the stock was trading at around $ 590 at around 1:00 p.m., compared to $ 621 at the end of trading on Thursday. The current price leaves Tesla, which sells electric cars, batteries, and solar panels, with a market value of around $ 565 billion. A month ago, Tesla stock was priced at over $ 870 a share and marketed more than $ 800 million as many investors had bet it would revolutionize the auto and energy industries and take fatal blows to older and more established companies would move.
The sharp decline is due to the fact that many investors have withdrawn from riskier stocks and investments in anticipation of rising interest rates. Additionally, auto analysts and sales data suggest that Tesla faces tougher competition in the US and China. Morgan Stanley analysts said Wednesday that Tesla lost market share to Ford Motor’s new electric model, the Mustang Mach E, last month in the US.
The China Passenger Car Association also said Tesla sold 15,484 locally made cars in January. That is more than in the same period last year, but less than in December (23,804). Tesla’s sales in China often fluctuate when the company exports batches of cars made at a Shanghai plant to other markets such as Australia and Europe.
“Tesla really benefited from that bill:” It doesn’t matter how many vehicles we sell this year or how much money we burn, “said David Whiston, a Morningstar analyst.” It was all like, ‘Where are we going be in five or ten years? ‘ But there has been a little more turbulence lately. “
But Mr Whiston added that Tesla stock’s price is incredibly volatile and it can be difficult to derive clear trends from how it moves up and down. “The way it fluctuates, I wouldn’t be surprised if it is back over $ 700 next week,” he said.
Institutional investors may have sold some of their stakes in Tesla in the past few weeks, but the forms of regulation that would disclose such sales won’t be made public for weeks. Some major shareholders cut their Tesla holdings last year. Baillie Gifford, a Scottish investment manager and longtime Tesla shareholder, trimmed his position to just over 27 million shares late last year, compared to nearly 59 million shares at the end of June.
Tesla has long been a popular destination for investors looking to take advantage of declines in stocks. Known as short sellers, they borrow stocks and sell them in the hopes of buying them back at a lower price in the future. Short sellers can pocket the difference between the sell and buy price if successful, but trades can also go horribly wrong when stocks rise sharply, as was the case recently with the shares of GameStop, the video game retailer.
As Tesla’s shares soared in recent years, short sellers would have lost billions of dollars on their bets, which may have deterred some of them from betting against Tesla, something that individual investors, many of whom adore the company’s chief executive, Elon Musk has gained great popularity. In mid-February, nearly 48 million Tesla shares had been sold short, according to the Nasdaq stock exchange, compared to nearly 61 million shares at the end of 2020.
The competitive threats against Tesla are mounting, but the company has enough cash to fund its business for some time. The company took advantage of its share price soaring over the past year by selling more than $ 12 billion in new shares to investors and now has more than $ 19 billion in cash. Tesla $ 1.5 billion spent On Bitcoin earlier this year, and even if the company took huge losses on that bet, it would still have considerable cash on hand.
Despite the recent decline, Tesla shares are still up around 300 percent over the past 12 months. And the company’s market value is more than the combined market cap of Toyota Motor, Volkswagen, Daimler, General Motors, and Ford – companies that sell a lot more cars than Tesla.