Tesla Inc. TSLA) – Request report Shares traded lower again on Friday, extending a move that brought nearly $ 275 billion in clean energy value from the automaker driven by rising interest rates and the ongoing correction in bitcoin.
Tesla shares are down nearly 30% since the stock closed at a record high of $ 883.09 on January 26, just one day before 10-year government bond yields began to rise 65 basis points based on a benchmark amidst accelerated inflation expectations and improving economic growth prospects.
Tech stocks, especially those with gains predicted to rise later, are particularly sensitive to interest rate hikes as investors’ arithmetic assigns a lower ‘present’ value to dollars earned in the future.
Tesla, which has booked only one profitable year since inception in 2011, is expected to grow its revenues consistently over the next few years as deliveries accelerate and production increases at new facilities in Texas and Germany, making ‘current’ value more dependent . on interest rate movements than companies currently in the black.
Tesla shares were flagged 11.33% lower on Friday during late morning trading to change hands at $ 551.00 each, the lowest since December 2 and a move that would peg the market value to just over $ 560 billion . At its peak in early January, Tesla was trading with a market cap of approximately $ 834 billion.
ARK Innovation ETF ARKK) – Request report Meanwhile, stocks have turned negative for the year, in part due to Tesla’s weakness. Cathie Wood, one of last year’s most notable fund managers and head of the $ 60 billion fund stable, has long been a supporter of both Tesla and Bitcoin, two of her fund’s main assets.
Linked to a second vulnerability in Tesla stock that could be linked to the recent $ 1.5 billion purchase of bitcoin, it should be kept on the company’s balance sheet as a supposedly ‘intangible’ asset.
That means that, like the value of “goodwill,” it cannot be increased, but it can be written down when bitcoin prices fall, making Tesla’s stock price at least partially related to bitcoin fluctuations.
Bitcoin prices are down nearly 20% since hitting a record high of $ 58,000 on February 21, in part due to rising bond yields making US dollar holdings more attractive
Tesla short-selling also remains robust, with $ 32.16 billion – or 6.4% of the outstanding float in play. Tesla shorts are up $ 1.18 billion since last week, according to data from S3 Partners.
In fact, by betting against Tesla this year, short sellers have delivered about $ 4.28 billion in mark-to-market profits, including $ 1.94 billion from yesterday’s nearly 5% drop.
The fundamentals of the car market aren’t working in Tesla’s favor either: earlier this week, its China-based rival, NIO NIO, warned that sales of electric cars in the world’s largest market would slow for the first three months of the year after a – expected loss in the fourth quarter.
Tesla sold 15,484 of its China-made cars in January, the China Passenger Car Association (CPCA) said last month, up from 23,804 in December. Tesla sales in China were about one-fifth of its total total in 2020 – when it delivered a record 499,550 vehicles – compared to just 12% in 2019.
CPCA will release February sales data on March 8.
One investor not concerned about the interest pressures of the market fundamentals is billionaire Ron Baron, an early Tesla bull who leads Baron Capital Management.
Baron, who holds 1.1 million Tesla shares in his personal account, has reduced Baron Capital’s exposure by approximately 1.7 million shares over the past six months at an average price of $ 666.70, but still expects it to share will rise to $ 2,000 in the next ten years. years.
“When we started talking about Tesla in 2014, I said we would make at least 20 times our money and everyone was skeptical,” Baron told CNBC on Thursday. “According to most people, it was unlikely that electric cars would dominate.”
“Now even General Motors expects GM to have an all-electric fleet by 2035, so it’s moving in that direction and Tesla is the leader,” he added.