Tesla shares are falling. 4 reasons why

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Actions of Tesla (TSLA) it fell 6% on Tuesday after closing 8.5% on Monday, ending year-over-year gains. Shares closed with a record just over $ 883 on Jan. 26 and have since fallen. It fell to $ 619 on Tuesday, the first time Tesla shares fell below $ 700 since Dec. 31.
Tesla announced earlier this month that it had invested $ 1.5 billion in bitcoins. This helped fuel bitcoin’s recent rise and, according to some estimates, earned Tesla a quick $ 1 billion profit, more than it has ever made with car sales in a single year.
But on Saturday, in response to a critic about Tesla’s investment in bitcoins, Musk he tweeted that the prices of Bitcoin and another cryptocurrency called Ether “seem high.” This helped send the price of bitcoin (XBT) fell 9.3% in trading on Monday, which may have helped drag Tesla shares.

“Bitcoin is the smart move at the right time for Tesla in our opinion, but on the downside, it adds to the history of Tesla its firecracker games and adds risk and volatility,” he said. Daniel Ives, technology analyst at Wedbush Securities, who remains bullish on Tesla Shares.

Model Y prices

Last Thursday, Tesla cut the price of the cheapest version of the Model Y and the best-selling Model 3 cars by $ 2,000. This brought the price of the Model Y “standard range,” which can travel 244 miles charged, to $ 38,490, and the Model 3 standard model to $ 34,590.

But over the weekend, the cheaper version of the “standard model” of the Model Y disappeared from Tesla’s sales site, leaving only the longest and most far-reaching versions of the SUV. Tesla did not explain its decision.

“We see plausible reasons like any other: the mix leaned too much on the cheaper variant and was therefore going to kill its margins, or it’s more likely that there just wasn’t much demand for the lower variant,” he said. said Gordon Johnson of GLJ Research, one of the most bearish critics of Tesla’s shares. He said recent price cuts and other price cuts show Tesla vehicles do not have the demand their fans claim.

“Tesla can’t keep its current factories running without … price cuts,” Johnson said in a note Monday.

Increased competition

Recently, established car manufacturers have set ambitious targets for their own electric vehicle sales.

General Motors (GM) a week ago it launched an SUV version of its Chevrolet Bolt, priced much lower than the Model Y, and announced that it intends to sell only zero-emission cars after 2035. Ford (F) set an even more ambitious EV target for its European sales, saying all vehicle models it sells will have electric vehicles by 2030.
apple (AAPL) it is also considering partnering with an automaker to get started in the automotive business, according to several news reports.

These efforts are making some Tesla investors nervous, Ives said, though he believes there will be enough change in electric vehicles for several winners among global carmakers.

Investors stepped forward

Tesla shares peaked a day before a disappointing earnings report on Jan. 27 fell short of Wall Street analysts ’forecasts.
The gains showed that the money Tesla earned from the sale of regulatory credits to other automakers exceeded its overall net revenue. Critics, such as Johnson, said it is proof that Tesla is not capable of making money by building and selling cars (although, according to some other profit measures, Tesla is profitable).

During the Jan. 27 earnings conference call, Musk also talked about the lack of batteries needed to power electric vehicles. He said that even with Tesla’s internal battery supply and its planned expansion of battery production, the company is struggling to find the batteries it wants to build more vehicles.

“The fundamental limitation of electric vehicles right now, in general, is the full availability of [battery] cells, “he said. For example, Musk said Tesla would have already started producing a semi-tractor if it had the batteries available to do so.

The stocks continue high

Tesla shares rose 743% market leader in 2020 as investors adopted the idea that the future of the automotive industry would be electric. Tesla remains by far the most valuable carmaker in the world, with a much higher market value than the eight largest carmakers combined.

Even with the recent decline. Tesla shares have risen about 1,300% since October 2019, when it reported a third-quarter profit that surprised investors by sending shares to tears.

Some investors believe Tesla’s shares flew too high. Still, many analysts believe Tesla will recover. Ives has a 12-month target price of $ 950.

Still, he has a warning: “Close the ‘seat belt again’ for Tesla shares with more volatility on the horizon,” Ives said.

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