https://www.statista.com/chart/29002/tesla-market-capitalization/
Shockingly, Tesla’s drop in market capitalization, roughly $800 billion from its peak, is larger than the mixed valuation of just about any legacy automotive producer you would consider. As the next chart exhibits, the mixed market capitalization of Toyota, Volkswagen, Mercedes-Benz, BMW, GM, Ford, Stellantis (Fiat Chrysler and PSA), Honda, Hyundai, Kia, Nissan and Renault continues to be greater than $100 billion shy of Tesla’s market cap decline.
So what prompted that extraordinary fall of one of many best-performing shares of 2020 and 2021? Firstly, Tesla was all the time valued as a high-growth inventory, that means a lot of its valuation was based mostly on its future potential. Because the financial outlook darkened all through 2022, so did Tesla’s potential for future development, particularly contemplating that inflation and excessive rates of interest will ultimately have an effect on client spending on big-ticket gadgets comparable to automobiles.
Secondly, Elon Musk’s acquisition of Twitter is clearly taking part in a task in Tesla’s current decline. Not solely did Musk promote billions value of Tesla shares this 12 months to finance the deal, however he’s additionally been tied up in main the social media platform because the deal was accomplished on the finish of October. His very public strategy to overhauling Twitter has left many Tesla shareholders questioning whether or not he’s nonetheless absolutely targeted on his position as Tesla CEO.
Musk himself provided a unique rationalization for Tesla’s decline on Tuesday: “In easy phrases: As financial institution financial savings account rates of interest, that are assured, begin to strategy inventory market returns, that are not assured, individuals will more and more transfer their cash out of shares into money, thus inflicting shares to drop,” he tweeted, not explaining why Tesla has underperformed the general market considerably this 12 months.
Only a notice, this text was from Dec 2022, so there’s been an extra drop in TSLA since then.
