Tesla’s stock price fell more than 10% on Friday morning, adding to steady losses over the past month that wiped out about a third of the automaker’s market value amid concerns over falling prices. sales.
After recouping some of those losses, the stock was trading at around $ 590 around 1pm, up from $ 621 when trading ended 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’s share price was over $ 870 per share and its market value was over $ 800 billion, with many investors betting the company would revolutionize the auto and automotive industries. energy, dealing fatal blows to older and more established businesses.
The sharp drop comes as many investors pulled back from stocks and riskier investments in anticipation of rising interest rates. Additionally, auto analysts and sales data suggest Tesla faces stiffer competition from the United States and China. Morgan Stanley analysts said on Wednesday that Tesla lost 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 locally made cars in January. That’s higher than the same time a year ago, but lower than the 23,804 total in December. Tesla’s sales in China often fluctuate when the company exports batches of cars made at a factory in Shanghai to other markets such as Australia and Europe.
“Tesla has really taken advantage of that halo of ‘It doesn’t matter how many vehicles we sell this year or how much money we burn,’ said David Whiston, Morningstar analyst. “It was all, ‘Where are we going to be in five or ten years?’ But lately there has been a little more turmoil.
But Mr Whiston added that Tesla’s stock price was incredibly volatile and it might be difficult to deduce clear trends from watching it rise and fall. “The way it fluctuates, I wouldn’t be surprised if it came back above $ 700 next week,” he says.
Institutional investors may have sold some of their stakes in Tesla in recent weeks, but regulatory forms that would reveal such sales won’t come out for weeks. Some large shareholders reduced their Tesla holdings last year. Scottish investment manager and longtime Tesla shareholder Baillie Gifford reduced his position to just over 27 million shares at the end of last year, from nearly 59 million shares at the end June.
Tesla has long been a prime target for investors looking to profit from falling stock prices. 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 sell price and the buy price, but trades can also go wrong if the stock price rises a lot, as recently happened with stocks. from GameStop, the video game retailer.
As Tesla’s stock has skyrocketed in recent years, short sellers have reportedly lost billions of dollars on their bets, perhaps scaring some of them to bet against Tesla, which has gained wide popularity among individual investors, many of whom revere the company’s chief executive, Elon. Musk. As of 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.
Competitive threats to Tesla are increasing, but the company has enough cash to fund its operations for some time. It took advantage of its stock price surge last year 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 at the start of this year, and even though the company suffers big losses on that bet, it would still have significant cash on hand.
Despite the recent drop, Tesla shares are still up around 300% over the past 12 months. And the company’s market value is more than the combined market capitalization of Toyota Motor, Volkswagen, Daimler, General Motors, and Ford – companies that sell significantly more cars than Tesla.