What does the stock weigh?

Shares of Tesla fell to 8% on Friday morning. Since then, they have recovered to less than 4%, as markets experienced a dramatic rebound on Friday, but stocks have still lost more than 15% of their value in the year and ended below 600 dollars for the first time since December 4th. .

These are some of the most important factors that weigh on cult stocks and eliminate Elon Musk’s head in the world’s richest crown: the CEO owns about 22% of Tesla shares.

On Thursday, Fed Chairman Jerome Powell said “upward pressure on prices” and “transient increases in inflation” could hit the U.S. as the economy reopens after a year of restrictions covides that affected companies around the world.

Now the market is worried about rising interest rates and the feds will not take aggressive political action or even be able to control them. Bond yields are rising.

This is leading to a broader correction in technology stocks, which are valued based on the presumption of strong growth in future cash flows. As inflation increases, the value of these future cash flows decreases. As previously reported by CNBC, the Nasdaq 100 list of the 100 largest non-financial stocks on the stock exchange is down about 8% from the all-time highs reached three weeks ago.

This affects most tech giants. For example, Apple has dropped from about $ 129 to $ 121 a year to date and Netflix has dropped from about $ 523 to $ 516. But the fall of Tesla is more precipitous so far.

Some of Tesla’s biggest and vocal sponsors have taken a share of their shares and have begun to recognize the onslaught of electric vehicle competition as a real challenge to Tesla.

For example, Ron Baron sold 1.7 million Tesla shares and invested in two of the company’s biggest potential rivals, GM-owned Cruise and Rivian, with the backing of Amazon, while paradoxically saying that he expects Tesla shares to eventually rise to $ 2,000.

Former Tesla board member Steve Westly told CNBC’s Power Lunch this week that while he remains bullish, “Tesla won’t be the king of the hill forever.” He added: “They will get competition from all sectors. They will have to double down to compete.”

In fact, automakers such as Ford and Volkswagen have experienced early success with sales of their electric vehicles, including Mach E and ID.3, compared to Tesla models in the US and Europe.

Meanwhile, the upcoming electric vehicles, including the all-electric version of Ford’s F-150, Lucid Air, Rivian’s SUVs and electric trucks, and others, are causing excitement. Just yesterday, Porsche showed off the production version of its Taycan Cross Turismo and said it would begin sales in the United States this summer. It’s a $ 90,000 EV wagon, a more affordable and practical model on Porsche’s EV performance, the Taycan.

The shortage of semiconductors has caused most car manufacturers to temporarily close some lines in their factories and Tesla is no exception.

Tesla CEO Elon Musk acknowledged that the company’s Fremont, California plant was temporarily closed due to a “shortage of parts” in a tweet on Feb. 25. He said it was closed for only two days, but did not make it clear whether partial closures of some lines would continue.

Tesla had previously warned, in its earnings and earnings presentation for the fourth quarter of 2020, that the shortage of chips could hamper its vehicle production targets during the first half of 2021.

Chief Financial Officer Zachary Kirkhorn said in the call with investors that for the first quarter of 2021:

“[Model] Production of S and X will be low due to the transition to newly rebuilt products. In addition, we are working very hard to manage the global semiconductor shortage and port capacity that can have a temporary impact. “

If Tesla does not produce a high volume of vehicles, due to the shortage of parts or the delayed time of sending parts from abroad to its US plants, the company would not generate as many regulatory credits as it wants. . Tesla sells these environmental credits to other automakers, so it has historically achieved profitability.

Cost control has been in the mind and deactivation of CEO Elon Musk for years.

In December 2020, he wrote by e-mail to all Tesla employees: “Investors give us a lot of credit for future profitability, but if, at some point, they come to the conclusion that this will not happen, our actions they will be immediately crushed like souffle under a hammer! “

But at the same time, Tesla is in a tear of expansion that will cost it financially. The electric vehicle manufacturer is building factories in Austin, Texas, in Brandenburg, Germany and expanding its footprint in China. It has also begun renovation 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 extract its own lithium nationally. And to increase the production of Tesla battery cells in a pilot plant also in Fremont.

In addition to these efforts, the company is in the midst of costly recoveries and could face further, either voluntary or mandatory. The most important of these voluntary recoveries, in China and the United States, Tesla recalls Model S and X vehicles experiencing touch screen failures.

–Jessica Bursztynsky contributed to this report.

Correction: Tesla finished 3.78% on Friday.