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Last News |   Tesla’s stock is collapsing.  4 reasons why

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Actions of You’re here (TSLA) fell 6% on Tuesday after closing 8.5% lower on Monday, wiping out its gains of the year. The stock closed at a record high just above $ 883 on January 26 and has fallen since. It fell to $ 619 on Tuesday, the first time Tesla shares have fallen below $ 700 since Dec.31.
Tesla announced earlier this month that it has invested $ 1.5 billion in bitcoin. This helped fuel the recent bitcoin rally and, by some estimates, earned Tesla a quick $ 1 billion profit – more than it ever made by selling cars in a single year.
But on Saturday, responding to a criticism of Tesla’s bitcoin investment, Musk tweeted that the price of bitcoin and another cryptocurrency called Ether “seems high.” This helped send the price of Bitcoin (XBT) down 9.3% on Monday, which may have helped push Tesla shares down.

“Bitcoin is the smart move at the right time for Tesla in our opinion, but on the downside it plays with firecrackers and risk and volatility add to Tesla’s story,” said Daniel Ives, technology analyst at Wedbush Securities, which remains bullish on Tesla shares.

Model Y pricing

Last Thursday, Tesla slashed the price of the cheapest version of its Model Y and top-selling Model 3 cars by $ 2,000. That brought the price of the “standard range,” Model Y, the one that can go 244 miles on one charge, to $ 38,490 – and the standard range Model 3 to $ 34,590.

But over the weekend, the cheaper “standard range” version of the Model Y vanished from Tesla’s sales site, leaving only the more expensive long-range and performance versions of the SUV. Tesla did not explain his decision.

“We see the plausible reasons as follows: the mix was too skewed towards the cheaper variant, and so that was going to kill their margins, or more likely there just wasn’t much demand for the lower variant,” said Gordon Johnson of GLJ Research, one of the more bearish critics of Tesla stocks. He said the recent price drops and other price drops show Tesla vehicles don’t have the demand his fans claim.

“Tesla cannot keep its current factories at full capacity without … price cuts,” Johnson said in a note Monday.

Increased competition

Established automakers recently set ambitious targets for their own sales of electric vehicles.

General Motors (GM) launched an SUV version of its Chevrolet Bolt a week ago, at a much lower price than the Model Y, and announced plans to sell only emission-free cars after 2035. Ford (F) set an even more ambitious EV target for its European sales, saying all car models it sells there will be EVs by 2030.
Apple (AAPL) is also considering teaming up with an automaker to get into the auto business, according to several press reports.

These efforts are making some Tesla investors nervous, Ives said, although he believes the switch to electric vehicles will be enough for several winners among global automakers.

Investors got ahead

Tesla shares peaked a day ahead of a disappointing Jan. 27 earnings report that fell short of expectations by Wall Street analysts.
Profits showed that the money Tesla made from selling regulatory credits to other automakers exceeded its overall net profit. Critics, like Johnson, said it was proof that Tesla was unable to make money by building and selling cars (although by other measures of profit, Tesla was profitable) .

On the Jan. 27 earnings conference call, Musk also spoke about a shortage of batteries needed to power electric vehicles. He said that even with Tesla’s internal battery supply and its planned expansion of battery production, the company is scrambling to find the batteries it wants to build more vehicles.

“The fundamental limit of electric vehicles today, in general, is the total availability [battery] For example, Musk said Tesla would have already started producing a semi-tractor if he had the batteries available to do so.

Stocks are still on the rise

Tesla shares rose 743% to lead the market in 2020 as investors embraced the idea that the future of the auto industry will be electric. Tesla remains by far the most valuable automaker in the world, with a market value well above that of the eight largest automakers.

Even with the recent decline. Tesla shares have risen around 1,300% since October 2019, when it reported third-quarter earnings that surprised investors, sending shares to a tear.

Some investors believe Tesla’s stock has soared too high. Still, many analysts believe Tesla will rebound. Ives has a 12 month target price of $ 950.

But even Ives has a warning: “It’s again ‘buckle up’ for Tesla’s stock with more volatility on the horizon.”

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