Tesla’s share price fell more than 10 percent on Friday morning, leading to a steady loss over the past month that wiped out about a third of the carmaker’s market value amid concerns over sales.
After some of the losses were recovered, the stock traded around 1pm by 1pm, 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 about $ 565 billion. A month ago, Tesla stock prices were priced at more than $ 870 per share, and their market value was more than $ 800 billion, as many investors bet the company would revolutionize the automotive and energy industries and make older and more established companies would fatally strike.
The sharp decline comes as many investors have retreated from riskier stocks and investments in anticipation of rising interest rates. In addition, car analysts and sales data suggested that Tesla is facing greater competition in the United States and China. Analysts at Morgan Stanley said on Wednesday that Tesla lost its market share in the United States last month to Ford Motor’s new electric model, the Mustang Mach E.
The China Passenger Car Association also said Tesla sold 15,484 local cars in January. This is higher than the same period a year ago, but lower than the total of December in 23,804. Tesla’s sales in China often fluctuate when the company exports cars manufactured in a factory in Shanghai to other markets such as Australia and Europe.
“Tesla really benefited from the halo: ‘It doesn’t matter how many vehicles we sell this year or how much cash we burn,'” Morningstar analyst David Whiston said. ‘It was all’ Where are we going to be in five or ten years? ‘But lately, there’s been a bit more turmoil. ‘
But Whiston added that the Tesla share price was incredibly volatile and that it can be difficult to deduce clear trends when he sees it move up and down. “As it varies, I would not be surprised if it is above $ 700 again next week,” he said.
Institutional investors may have sold some of their shares in Tesla over the past few weeks, but the forms of regulation that would reveal such sales will not appear for weeks. Some major shareholders scrapped their Tesla holdings last year. Baillie Gifford, a Scottish investment manager and a long-time shareholder in Tesla, cut its position to just over 27 million shares at the end of last year, compared to almost 59 million at the end of June.
Tesla has long been a favorite target of investors aiming to take advantage of declines in stock prices. They are known as short sellers, and they borrow shares and sell them in the hope of buying them back at a lower price in the future. If successful, short sellers could pocket the difference between selling price and buying price, but transactions can also go terribly wrong if stock prices rise sharply, as happened recently with shares of GameStop, the video game retailer.
As Tesla’s share soared over the past few years, short sellers would have lost billions of dollars on their bets, and perhaps deterred some of them from betting against Tesla, which has become very popular with individual investors, many of whom are CEOs. of the company, Elon, respectfully. Musk. In mid-February, according to the Nasdaq stock exchange, nearly 48 million Tesla shares were sold short, compared to 61 million shares at the end of 2020.
The competitive threats against Tesla are increasing, but the company has enough cash to finance the operations for some time. He took advantage of his rising share price last year by selling more than $ 12 billion worth of 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 takes large losses on the bet, it will still have significant cash on hand.
Despite the recent decline, Tesla shares have continued to rise by about 300 percent over the past twelve months. And the company’s market value is more than the combined capitalization of Toyota Motor, Volkswagen, Daimler, General Motors and Ford – companies that sell far more cars than Tesla.