https://www.statista.com/chart/29002/tesla-market-capitalization/
Shockingly, Tesla’s drop in market capitalization, roughly $800 billion from its peak, is greater than the mixed valuation of just about any legacy automotive producer you could possibly consider. As the next chart reveals, 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 brought about that extraordinary fall of one of many best-performing shares of 2020 and 2021? Firstly, Tesla was at all times valued as a high-growth inventory, which 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 finally have an effect on shopper spending on big-ticket gadgets corresponding to vehicles.
Secondly, Elon Musk’s acquisition of Twitter is clearly enjoying 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 method to overhauling Twitter has left many Tesla shareholders questioning whether or not he’s nonetheless absolutely targeted on his function as Tesla CEO.
Musk himself provided a special clarification for Tesla’s decline on Tuesday: “In easy phrases: As financial institution financial savings account rates of interest, that are assured, begin to method inventory market returns, which aren’t 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 word, this text was from Dec 2022, so there’s been an extra drop in TSLA since then.
