Tesla’s share price fell more than 10% on Friday morning, adding to steady losses last month that wiped out about a third of the automaker’s market value amid concerns over sales plummeted.
After recovering some of those losses, the stock was trading at around $ 590 around 1pm, down from $ 621 at the end of trading on Thursday. The current price level makes Tesla, the company that sells electric cars, batteries and solar panels, with a market value of about $ 565 billion. A month ago, Tesla’s stock was valued at over $ 870 per share and its market value was over $ 800 million as many investors bet that the company would revolutionize the automotive and energy industries. , inflicting a fatal blow on older and older companies.
The sharp decline occurred as many investors withdrew from more risky stocks and invested in anticipation of an increase in interest rates. Additionally, auto analysts and sales data have suggested that Tesla is facing more stiff competition in the United States and China. Analysts at Morgan Stanley on Wednesday said Tesla lost market share last month in the United States to Ford Motor’s new electric vehicle, the Mustang Mach E.
The China Passenger Vehicle Association also said Tesla sold 15,484 domestically produced cars in January. This is higher than the same period last year, but lower than December’s 23,804 total. Tesla’s sales in China are often volatile as the company exports its Shanghai factory-produced car shipments. other markets such as Australia and Europe.
“Tesla has really benefited from that aura,” said David Whiston, a Morningstar analyst. “It doesn’t matter how many cars we sell this year or how much cash we burn.” “It’s all just, ‘Where are we going five or 10 years from now?’ But recently it’s been a bit more turbulent ”.
However, Mr. Whiston added that Tesla’s share price is extremely volatile and it is difficult to deduce a clear trend when watching it move up and down. “The way it moves, I wouldn’t be surprised if it goes back above $ 700 next week,” he said.
Institutional investors may have sold some of their stakes in Tesla in recent weeks, but regulatory forms that will reveal such sales won’t be announced for weeks. Some of the major shareholders cut their stake in Tesla last year. Baillie Gifford, a Scottish investment manager and longtime Tesla shareholder, cut his position to just over 27 million shares by the end of last year, down from nearly 59 million shares at the end. June.
Tesla has long been a favorite target for investors to profit from stock price declines. Known as short sellers, they borrow stocks and sell them, hoping to buy them back in the future at a lower price. If successful, short sellers can pocket the difference between the ask and ask price, but trades can also go terribly wrong if the share price goes up too much, as happened recently with stocks. by GameStop, a video game retailer.
As Tesla’s stock skyrocketed in recent years, short sellers lose billions of dollars when placing bets, perhaps discouraging some of them from betting on Tesla, which has become widely available. Among individual investors, many of them are revered by the company’s CEO, Elon Xxua. In mid-February, nearly 48 million Tesla shares were short sold, according to the Nasdaq, down from nearly 61 million shares by the end of 2020.
The threats of competition against Tesla are growing, but the company has enough cash to fund its operations for a while. It took advantage of last year’s skyrocketing stock price by selling more than $ 12 billion in new shares to investors and now has more than $ 19 billion in cash. Tesla spent $ 1.5 billion on Bitcoin earlier this year, and even if the company lost heavily from that bet, it would still have substantial cash on hand.
Despite the recent slump, Tesla shares are still up about 300% over the past 12 months. And the company’s market cap is more than the market capitalization of Toyota Motor, Volkswagen, Daimler, General Motors and Ford – companies that sell more cars than Tesla.