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Elon Musk
Scott Olson / Getty Images
News that
adze
there may be a Chinese issue that stole a few shares on Friday.
China, after all, matters a lot to every electric vehicle manufacturer, and Tesla is the most valuable electric vehicle manufacturer. Now CEO Elon Musk has addressed the issue. And he doesn’t seem too worried.
On Friday, The Wall Street Journal reported that the Chinese government may no longer drive Tesla vehicles (ticker: TSLA) for national security reasons. The moment coincided with the US-China talks in Alaska, which turned into a back-and-forth dispute over human rights and democracy.
Tesla shares fell at the start of trading on Friday, but ended the day by about 0.3% while
Nasdaq Composite
gained 0.8% and
S&P 500
he fell a little.
Reuters reported on Saturday that Musk told Chinese listeners that his company has a very strong incentive to be very careful with any information that could be collected by the company or by sensors and cameras on its cars.
“If Tesla used cars to spy on China or anywhere, we will be stopped,” Musk told Reuters.
For equities, the problem with the Chinese government seems small, but investors must follow, as China is critical to the company’s success. China is the largest market for new cars and new electric vehicles. Wedbush analyst Dan Ives calls China the centerpiece of the company’s future growth. It values the Tesla stock as Hold and has a target price of $ 950 per share.
“At a time of white tensions between the US and China, Musk & Co. is in a unique position – together with
Apple
– to be caught in the crossfire “, Ives wrote in a report on Friday. He added that while he did not expect the situation to get out of hand, he was closely following developments.
Tesla shares have fallen in recent weeks, but not because of geopolitical tensions.
Higher interest rates affected Tesla shares. High rates affect high-growth stocks like Tesla more than others. For starters, higher interest rates make financing financing more expensive. Second, high-growth companies generate most of their cash flow in the future. Higher rates make the promise of future cash a little more attractive, relatively speaking, than the higher yield on bonds today.
Tesla shares have fallen about 7% so far, following the comparable results of the S&P 500 and
Dow Jones Industrial Average.
Shares are down about 27% from a 52-week high in January. The yield on the 10-year treasury note has recently risen above 1.7%, up by about 0.5% in recent weeks.
Write to Al Root at [email protected]