Tesla’s stock price fell more than 10 percent on Friday morning, adding to the constant losses over the past month that wiped out about a third of the automaker’s market value amid concerns about weak sales.
After recovering some of those losses, the stock was trading at around $ 590 around 1 pm, compared to $ 621 at the end of Thursday’s trading session. 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’s shares were quoted above $ 870 and its market value was more than $ 800 billion, as many investors were betting that the company would revolutionize the automotive and energy sectors, delivering fatal blows to more old and established.
The sharp drop comes at a time when many investors withdrew from riskier stocks and investments in anticipation of rising interest rates. In addition, automotive analysts and sales data have suggested that Tesla is facing tougher competition in the United States and China. Morgan Stanley analysts said on Wednesday that Tesla lost market share last month in the United States to Ford Motor’s new electric model, the Mustang Mach E.
The China Passenger Car Association also said that Tesla sold 15,484 locally made cars in January. This is higher than in the same period last year, but lower than the total of 23,804 in December. Tesla’s sales in China tend to fluctuate when the company exports lots of cars made at a Shanghai plant to other markets, such as Australia and Europe.
“Tesla really benefited from this ‘No matter how many vehicles we sell this year or how much money we burn’ halo,” said David Whiston, an analyst at Morningstar. “It was like, ‘Where are we going to be in five or ten years?’ But lately there has been a little bit more turbulence. “
But Whiston added that Tesla’s stock price was incredibly volatile and it can be difficult to deduce clear trends by watching them go up and down. “As it fluctuates, I wouldn’t be surprised if it rises above $ 700 next week,” he said.
Institutional investors may have sold some of their holdings in Tesla in recent weeks, but the regulatory forms that would reveal those sales will not come out for weeks. Some large shareholders reduced their holdings in Tesla last year. Baillie Gifford, a Scottish investment manager and a longtime shareholder of Tesla, reduced its position to just over 27 million shares at the end of last year, from almost 59 million at the end of June.
Tesla has long been a favorite target of investors looking to profit from falling stock prices. Known as short sellers, they borrow shares and sell them, hoping to buy them back at a lower price in the future. If successful, short sellers can pocket the difference between the sale and purchase price, but trades can also go terribly wrong if the stock price goes up too much, as recently happened with the shares of GameStop, the retailer video games.
As Tesla’s stock skyrocketed in recent years, short sellers would have lost billions of dollars in their bets, perhaps scaring some of them out of betting against Tesla, which has gained great popularity among individual investors, many of whom revere the president- company executive, Elon Almíscar. In mid-February, nearly 48 million Tesla shares were short, according to the Nasdaq stock exchange, compared with nearly 61 million shares in late 2020.
Competitive threats against Tesla are growing, but the company has enough money to finance its operations for some time. It took advantage of the rise in stock prices last year, 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 suffered huge losses from that bet, it would still have significant money in hand.
Despite the recent decline, Tesla’s shares are still up about 300 percent in 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 far more cars than Tesla.