Tesla shares are halved | wolf street

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But it’s not a stock split.

By Wolf Richter for WOLF STREET.

Water-walking CEO Elon Musk has been busy lately with his other interests and pranks, like wanting to buy Twitter for $44 billion, then after signing the binding merger deal, it’s like forgetting LOL, and then after realizing the courts could embarrassingly force him to buy Twitter for $44 billion, it’s like, no problem, I’m going to voluntarily buy it and turn it into the next big thing, LOL , similar to the tweet, “I’m considering taking private Tesla at $420. Financing assured,” which was a weed joke, and no one held their feet to the fire. Tweeter last year, “I’m thinking of creating a new university: Texas Institute of Technology & Sciences”: not MIT but TITS, understood?

And then, in addition to Twitter and tweets, there’s SpaceX with its fancy rockets and its Starlink satellite service, and its Burned Hair perfume, and whatever. So the richest man in the world can afford to be funny with this stuff.

But he is much less wealthy than he was last November. ‘Cause the only thing he couldn’t do was keep Tesla stock [TSLA] levitating in the ionosphere. TSLA fell 7.6% today, to close at $204.99.

So TSLA has just been halved since the whole show started to separate last November, from its November 4th intraday high of $414.50 and its same day closing high of 409, $97.

The stock price has now returned to its initial level of December 2020. Since November 4, some $640 billion in market capitalization has gone up in smoke. Easy come, easy go (data via YCharts).

But even at that half price, Tesla is still ridiculously overvalued, a car company with a PE ratio of 74. Well, I apologize, for the true believers, Tesla isn’t a car company, it’s a religion.

Clearly, it’s been a shitty time for tech stocks, if you want to call them that, since Microsoft CEO Satya Nadella sold 50% of his Microsoft stock on Nov. 22 in numerous trades, 838 584 shares for $285.3 million, on a heck of a busy day. This turns out to have been the peak of the Nasdaq Composite, making Nadella one of the best insider market timers of all time. Since then, the Nasdaq Composite has plunged 36%, including today’s 3% drop.

But Tesla had significantly outperformed the Nasdaq on the upside, and now it’s outperforming the Nasdaq on the downside.

During the dotcom crash, the Nasdaq Composite plunged 78%, and it took two and a half years to get there, from March 2000 to September 2002. So today, we’re not even halfway there. path. But we pulled off the huge bear rally in the summer, just like we did in the summer of 2000. So things are on the right track.

Tesla shares are the largest component of Cathie Wood’s Ark Innovation ETF [ARKK]representing almost 10% of the fund, which is also a religion for true believers, and she remains an ardent fan – while lambasting the Fed in an open letter for raising interest rates and sabotaging her party.

So she told Yahoo Finance in an interview, “Certainly all stocks are struggling in this environment as the market tries to figure out how far the Fed is going to go and how far this recession is going. So Tesla is a solution. to the problem.

His ARK Innovation ETF, which was a big feature for more than a year in my Imploding Stocks column, has crashed 79% from its peak in February 2021, which was the infamous month when many of these actions in which she believes so ardently. started to crumble. At today’s close of $33.91, his ARKK ETF is back to where it was in September 2017. I mean, blame the Fed or whatever (data via YCharts):

But Tesla is the biggie. Unlike some of the other outfits whose inventory has imploded by 90% or more, Tesla has real products – akin to premium and luxury vehicles – that a lot of people want to buy around the world, and that Tesla can’t. enough at this point. And he makes money building these vehicles.

Musk has succeeded in forcing electric vehicles on legacy automakers, after they laughed at him for a decade. And they’re now all trying to make them, and they’re trying to grow their electric vehicle supply chains, and they’re trying to hire engineers, and they’re building factories and they’re making huge announcements daily. , and they’re spending tens of billions of dollars, and they’re putting out great products, but so far they can’t do enough either.

It’s the competition, and they’re all running wild and shooting Tesla. Tesla’s Cybertruck still isn’t out, but two automakers currently have electric pickup trucks on the street they can’t live without either: Ford and Rivian, and Tesla has fallen behind in what’s one best-selling vehicle segments in the United States.

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