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The stock price of Tesla (TSLA) fell below $700 for the fourth straight day. On the 23rd (local time), Tesla fell 8.55% on the previous day and then fell 2.19% on the same day to close at $698.84. It is the first time since December 31 last year that it has fallen below $700.
① Bitcoin
On this day, CNN Business summarized four reasons why Tesla’s stock price fell. The first reason is Bitcoin. Tesla announced earlier this month that it had invested $1.5 billion in Bitcoin. Since then, the price of Bitcoin has skyrocketed. Some have analyzed that Tesla’s soaring bitcoin price has made $1 billion more than the profit it made from selling cars in a year.
Ironically, it started to fall after Elon Musk, Tesla Chief Executive Officer, said, “Bitcoin and Ethereum prices seem too high.” Bitcoin price plummeted by close to 10%, which drove Tesla’s share price down. Daniel Ives, a tech analyst at Wedbush Securities, said, “It was a wise choice for Tesla to invest in bitcoin at the right time. On the down side, the risk and volatility in Tesla’s story increased as Tesla played with firecrackers.” . The company is still positive about Tesla.
② Model Y price issue
Model Y pricing issues also affected Tesla’s share price decline. Last week, Tesla lowered the price of the lowest-priced version of Model Y and Model 3 by $2,000 each. The Model Y Standard Range is priced at $38,490, and the Model 3 Standard Range is priced down to $34,590. The problem is that over the weekend, the standard range version of the Model Y low-cost model was deleted from Tesla’s website. Tesla has given no explanation for this decision. Gordon Johnson of GLJ Research, who has pointed out that Tesla’s share price is overvalued, explained that “Tesla may have been concerned about the possibility of margins shrinking due to too many low-cost versions, and there may not have been much demand for low-cost versions.” He added that the decision to cut the price could mean that Tesla is not selling more than expected, contrary to what Tesla fans claim. This means that it would not have been able to maintain the capacity of the existing Gonggang without price cuts.
③ Overheating of EV competition
The fact that competition is overheating as existing automakers launch electric vehicles is putting a burden on Tesla’s share price. General Motors (GM) recently released a version of the Chevrolet Volt SUV. It is cheaper than Model Y. Ford also announced plans to sell all passenger cars in Europe as electric vehicles by mid-2026.
It is known that Apple is also considering developing an electric vehicle. Ives points out that these efforts are making Tesla investors worry.
④ Concern about insufficient battery supply
Tesla’s share price fell more than 20% after hitting a high just before it released disappointing results on January 27th. Although it made annual net profits last year, there were many criticisms that it was profits from selling carbon credits. Another problem is low battery. In an earnings announcement on the 27th of last month, Musk mentioned the lack of battery supply required for electric vehicle output, and failed to set a target for supplying electric vehicles this year, causing disappointment to investors.
Tesla’s share price rose 743% last year. Investors’ hopes and expectations for the electric vehicle era were reflected. Despite the recent decline, many analysts believe Tesla’s share price could rebound. Ives suggested a Tesla target price of $950. He added, “As Tesla’s volatility increases, it is clear that it is time to fasten your seat belt.”
Reporter Jaeyeon Ko [email protected]
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