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| The photo shows Tesla’Model Y’displayed at the Yeongdeungpo branch of Lotte Department Store in Seoul on the morning of the 13th. 2021.1.13/News1 © News1 Reporter Kim Jin-hwan |
The share price of Tesla, an electric car maker in the US, has fallen below $600. Tesla became a hot topic because it bought bitcoin on a large scale last month. However, since then, the stock price has fallen by about 30%.
Tesla’s sharp decline of about 30% from its previous high can be explained by △ increasing inflation concerns, △ fierce competition in the market, △ investment in bitcoin, and △ shortage of semiconductors for vehicles.
◇ Increased inflation concerns across the market : First of all, the rise in US 10-year Treasury yields (interest rates) arising from inflation concerns is a big bad news for technology stocks that have been running upward.
If the interest rate rises, the company’s borrowing costs increase, damaging its performance. These concerns have grown around overvalued stocks.
In particular, Jerome Powell, chairman of the Federal Reserve (Fed), said on the 4th that there could be inflation, but the stock market was disappointed as he did not mention the policy to respond to government bond yields.
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| Jerome Powell Chairman of the Federal Reserve System of the United States. © AFP=News1 © News1 Reporter Dongmyeong Woo |
◇ Fierce competition in the market The fierce market competition is a more direct obstacle for Tesla.
Traditional automakers such as GM, Ford, and Volkswagen are also declaring that they will focus on electric vehicles one after another. In Europe, it gave up the No. 1 spot, and China is also being pushed out by the mainland companies. The US situation is also not relaxed.
On the 5th, CNN cited Morgan Stanley and reported that the Tesla share in the US electric vehicle market in February was 69%, down from the previous year (81%).
In this situation, competitors’ entry into the market is a double loss for Tesla. One of Tesla’s main sources of revenue is’emissions’ ($1.6 billion last year) related to environmental regulations, and when its own car sales decrease, its emission rights decrease, and as competitors’ electric car sales increase, the number of places to sell them decreases.
◇ Bitcoin investment also increases insecurity : Tesla’s large investment in bitcoin increased stock price instability. On February 8th, the company disclosed that it purchased bitcoin worth $1.5 billion (about 1.7 trillion won), which is about 8% of its cash reserves.
Since then, the stock price has fallen by about 30%. Compared to the 20% drop in Bitcoin, it has fallen even more.
◇ The lack of automotive semiconductors is also a bad thing : The fact that Tesla stopped its factory for two days due to a lack of automotive semiconductors, and that the cost of building or expanding factories in the US, Germany, and China was not good for the stock price, experts say.