Tesla Inc. (TSLA) – Get the report the shares traded lower again on Friday, extending a move that fell nearly $ 275 billion in value from the clean energy vehicle triggered by rising interest rates and continued bitcoin correction.
Tesla shares have fallen nearly 30 percent since the stock closed at a record high of $ 883.09 on Jan. 26, just one day before Treasury 10-year benchmark yields begin to rise 65 basis points on the background of accelerating inflation forecasts and improving economic growth prospects.
Technical equities, especially those with earnings that are expected to fall below, are particularly sensitive to interest rate hikes, as investors’ arithmetic assigns a lower value “today” to dollars earned in the future.
Tesla, which has seen just one profitable year since its inception in 2011, is expected to steadily increase its revenue over the next few years as deliveries accelerate and production grows in new facilities in Texas and Germany, making the more dependent “today” value. to interest rate movements than companies that are currently in the black.
Tesla shares were up 11.33% lower in late Friday morning trading to change hands at $ 551.00 each, the lowest since Dec. 2, and a move that would set its market value just above $ 560 billion. At its peak in early January, Tesla traded with a market cap of about $ 834 billion.
ETF ARK Innovation (ARKK) – Get the report Meanwhile, shares have been negative for part of the year due to Tesla’s weakness. Cathie Wood, one of last year’s top fund managers and head of the $ 60 billion fund, has long backed Tesla and Bitcoin, two of its fund’s key assets.
What is linked to a second vulnerability of Tesla shares that could be related to the recent acquisition of bitcoin worth 1.5 billion dollars, must be kept as a so-called “intangible” asset in the corporate balance sheet.
This means that, like the value of “goodwill”, it cannot be increased, but can be marked when bitcoin prices fall, leaving the price of Tesla shares at least partially related to bitcoin fluctuations.
Bitcoin prices have fallen nearly 20% since reaching an all-time high of $ 58,000 on Feb. 21, partly due to rising bond yields that make U.S. dollar holdings more attractive.
Short-term selling interest in Tesla also remains robust at $ 32.16 billion – or 6.4% of the outstanding amount at stake. Tesla shorts rose $ 1.18 billion last week, according to S3 Partners.
Betting against Tesla this year, in fact, soon generated sellers profits of about $ 4.28 billion, including $ 1.94 billion from yesterday’s decline of nearly 5%.
The fundamentals of the car market do not work in favor of Tesla either: earlier this week, its Chinese rival NIO NIO warned that sales of electric cars on the world’s largest market would slow in the first three months of the year, after a – loss of expected fourth quarter.
Tesla sold 15,484 of its Chinese-made cars in January, the China Automobile Association (CPCA) said last month, down from 23,804 in December. Tesla’s sales in China were around one-fifth of its total in 2020 – when it delivered a record 499,550 vehicles – up from just 12% in 2019.
CPCA will release February sales data on March 8th.
One investor who is not worried about any pressure from the market fundamentals rate is billionaire Ron Baron, an early Tesla bull who runs Baron Capital Management.
Baron, which owns 1.1 million Tesla shares in its personal account, has reduced Baron Capital’s exposure by about 1.7 million shares in the last six months to an average price of $ 666.70, but the shares are still expected to increase to $ 2,000 over the next ten months. years.
“When we started talking about Tesla in 2014, we said we would earn our money at least 20 times and everyone was skeptical,” Baron told CNBC on Thursday. “In the opinion of most people, electric cars are unlikely to dominate.”
“Now, even General Motors GM expects to have a fully electric fleet by 2035, so it’s going in that direction and Tesla is the leader,” he added.