What does the stock weigh?

Shares in Tesla fell up to 8% on Friday morning. They have since recovered to reach less than 4% as the markets showed a dramatic setback late Friday, but the stock lost more than 15% of its value this year and fell below $ 4 for the first time since December 600 ended. .

Here are some of the biggest factors that weigh the cult share and push the world’s richest crown off Elon Musk’s head – the CEO owns about 22% of the Tesla shares.

Fed Chairman Jerome Powell said on Thursday that “upward pressure on prices” and “short-term rises in inflation” could come to the U.S. as the economy reopens after a year of Covid restrictions hitting businesses across the line.

The market is now worried that interest rates will rise, and the credit providers will not take aggressive policy actions or even control it. Yields of bonds rise.

This causes a broader correction in technology stocks, which is valued on the basis of the suspicion of heavy growth in future cash flows. As inflation rises, so does the value of that future cash flow. As previously reported, the Nasdaq 100 list of the 100 largest non-financial stocks on the stock exchange is about 8% lower than the historical highs reached three weeks ago.

It affects most technology giants. For example, Apple has dropped from about $ 129 to $ 121 so far, and Netflix has dropped from about $ 523 to $ 516. But Tesla’s decline so far has been more depressing.

Some of Tesla’s biggest and most outspoken supporters paid out a portion of their shares and began acknowledging the onslaught of electric vehicle competition as a real challenge for Tesla.

Ron Baron, for example, sold 1.7 million Tesla shares and invested in two of the company’s biggest competitors, Cruise, which is owned by GM, and Rivian, which is supported by Amazon, while paradoxically saying that he expects that Tesla shares will eventually rise to $ 2,000.

Former Tesla board member Steve Westly said on CNBC’s Power Lunch this week that while he remains clumsy, “Tesla will not be the king of the hill forever.” He added: “They are getting competition from all sectors. They will have to double to compete.”

Indeed, automakers, including Ford and Volkswagen, have had early success with sales of their electric vehicles, including the Mach E and ID.3 versus Tesla models in the US and Europe.

Meanwhile, upcoming EVs, including the all-electric version of Ford’s F-150, the Lucid Air, Rivian’s electric SUVs and trucks, and others are arousing excitement. Just yesterday, Porsche unveiled the production version of its Taycan Cross Turismo and said it will launch in the US this summer. It’s a $ 90,000 EV car, a more affordable, practical use of Porsche’s performance EV, the Taycan.

The shortage of semiconductors has caused most automakers to temporarily close some lines at their factories, and Tesla is no exception.

Tesla CEO Elon Musk acknowledged in a tweet on Feb. 25 that the plant in Fremont, California, had been temporarily shut down due to “spare parts shortages.” He said it was only shut down for two days, but did not make clear whether partial shutdowns would continue on some lines.

Earlier in the revenue and filing of the Q4 2020, Tesla warned that chip shortages could hamper their vehicle production targets in the first half of 2021.

Zachary Kirkhorn, chief financial officer, said in the call with investors that for the first quarter of 2021:

“[Model] The production of S and X will be low due to the transition to the newly redesigned products. In addition, we are working very hard to manage the global shortage of semiconductors as well as port capacity that may temporarily affect. ‘

If Tesla does not produce a large amount of vehicles, due to spare parts shortages or delay times transporting parts from overseas to its US factories, the company will not get as many regulatory credits as it would like. Tesla sells these environmental credits to other car manufacturers, and this is how it has historically achieved profitability.

CEO Elon Musk has been thinking about cost control for years.

In December 2020, he wrote in an email to all Tesla employees: ‘Investors give us a lot of credit for future profitability, but if at any point they conclude that this is not going to happen, our stock will immediately like a souffle under a sledgehammer! “

At the same time, Tersla is working on an expansion crack that will cost it dearly. The EV manufacturer is building factories in Austin, Texas, Brandenburg, Germany and expanding its footprint in China. It also began renovating aspects of its Fremont facilities, including the paint shop, the area of ​​the factory where its cars are painted.

Musk also has ambitions for Tesla to mine its own lithium domestically. And to increase production of Tesla’s own battery cells at a pilot plant in Fremont.

In addition to these efforts, the company is in the midst of precious memories and can do more – whether voluntarily or compulsorily. The most important of these voluntary reminders, in China and in the US, reminds Tesla of the model S and X vehicles that go wrong with the touch screen.

Jessica Bursztynsky contributed to this report.

Correction: Tesla declined 3.78% on Friday.