Tesla recorded another slump on Tuesday and fell as much to $619. After an 8.5% drop on Monday, Tesla stock fell 6% more on Tuesday. According to CNN, the company has been declining since January 26, resulting in a loss for all gains from 2021. CNN wrapped up four reasons that could have contributed to the depreciating of Tesla stock.
Earlier this month, the electric vehicle company invested $1.5 billion in bitcoin. Bitcoin price, which had been already surging, skyrocketed even more following the news. The announcement is estimated to have brought Tesla an additional $1 billion profit. This figure alone outperforms Tesla’s car sales in a single year. Unfortunately, bitcoin’s 9.3% slump in trading Monday may also drag Tesla shares down too.
Daniel Ives, a tech analyst for Wedbush Securities told CNN that Tesla’s decision to invest in bitcoin is both advantageous and risky. Along with the investment, bitcoin’s volatile nature also applies to Tesla, Ives said.
Tesla Model Y pricing and the company’s balance
The prices for Tesla’s cheapest version of its Model Y and best-selling Model 3 cars were cut. Both cars were cut $2,000 from their original price, retailed at $38,490 and $34,590 respectively. A few days after, however, the cars went missing from Tesla’s sales site, unnoticed.
Upon this, Gordon Johnson of GLJ research commented, “We see the plausible reasons as either: the mix was skewed too much to the cheaper variant, and thus it was going to kill their margins, or more likely there just wasn’t much demand for the lower variant.” Johnson further added that the sudden confusion over price cuts might prove that Tesla vehicles are not in line with the demand that its fans claim.
Tesla in between the competitive, dynamic automotive market
The electronic vehicle market is getting more competitive. General Motors, Ford, and even Apple are now up in the game too. Each company came up with ambitious targets for the electronic vehicle market. Ford, for example, plans to sell electronic vehicles only by 2030 for its European sales. The slowly saturated electronic vehicle, might to some extent, made Tesla investors nervous.
Tesla stock might be overrated?
Tesla’s earnings report from January 27 was not as good as Wall Street analysts predicted. This, according to CNN, signs that Tesla’s earnings from the sale of regulatory credits to other automakers outgrowth its overall net income. To critics like Johnson, this is another proof that Tesla is still struggling to make money building and selling cars.
Furthermore, the company is also short for batteries to power its electric vehicles. Even with the in-house supply of batteries and the upcoming plan of expanding battery production, Tesla will still need to find more batteries.
Despite all the four factors mentioned, Tesla is still performing greatly. The shares rose a market-leading 743% in 2020, and investors are confident in the future of the electric vehicle industry. Though Tesla stock has been dropping, the company shares are still 1,300% higher since October 2019. No one can guarantee whether Tesla could surge as strong as it has always been, but the company surely might face more shaky moments in the future.