Musk's Tesla Stock Suffers
Considering Tesla's performance in a long term
Merry Christmas to you all!! Today, I am going to discuss this week's big news: Tesla stock is at its worst since the onset of the pandemic in early 2020.
Tesla lost $85 billion in market value this week as investors worry about the CEO Elon Musk running Twitter at the same time. The stock was worth 1.2 trillion at the beginning of this year, meaning it has lost 18% only in a week. Downward pressure on Tesla’s stock has intensified in recent months as Musk sold a critical amount of his Tesla shares for sustaining $44 billion to take over Twitter. But many investors think that the actual reason behind Musk's motives for his action is the expected decrease in profits
Despite its stock bull, I believe Tesla's operation may not be in danger in the long term. But I am aware that others are completely against my prediction. So this article will lead you to consider both bright and dark futures of Tesla through two factors. Is it going to continue leading the EV market in the coming years or end up losing in the EV competition? If you are a Tesla shareholder or a prospective shareholder, always remember to look into multiple perspectives and consider the time to sell or buy your shares.
The first factor to consider when examining Tesla's operation is its position in the market. While EV competition is heavy in China, one of Tesla's mega-markets, Tesla remains the dominant EV maker at home in the US. China has other EV giants such as BYD, which is already far above Tesla in BEV (battery electric vehicle) and PHEV (plug-in hybrid) sales combined. This is possibly why many analysts expect these companies to overtake US rivals globally in the next few years. However, we should be aware that Tesla remains the most profitable EV maker due to its high reputation for innovative visual designs and high-price offers.
The second factor we must look at is Tesla's price strategy in the coming years. Many analysts suggest Tesla will cut its prices in 2023. Picking up from outright cuts and other discounts in late 2022, a Bernstein analyst wrote a drop in Tesla's global average selling prices, to around $50,000 in 2023 from $53,500 in July to September 2022, does not appear implausible. Personally, I believe this will open doors for many potential consumers, and the gross profit will increase. Nonetheless, the number of patrons could remain the same, leading to fewer profits. I firmly believe it is investors' worry about Tesla's expected price cuts leading to a possible decrease in gross profit and Musk's role as a CEO that caused Tesla's recent stock plunge.
Considering all these aspects, you should decide whether or not Tesla will operate well in the coming years. There is a lot more to look into, and I recommend you do more research on your own. Let's follow business news in the remaining days of this year for more about Tesla :)
Thank you for reading Risametric articles this year!! We look forward to delivering more interesting information and case studies next year. The first article of 2023 will be on January 8th!! We hope you will have the best New Year holiday.