Tesla’s Stock Tumbles Amid Sales Worries and Market Volatility


“Tesla has really benefited from that halo of, ‘It doesn’t really matter how many vehicles we sell this year or how much cash we burn,’” said David Whiston, a Morningstar analyst. “It’s all been, ‘Where are we going to be five or 10 years from now?’ But lately there’s been a bit more turbulence.”

But Mr. Whiston added that Tesla share price was incredibly volatile and it could be hard to deduce clear trends from watching it move up and down. “The way it fluctuates, I wouldn’t be surprised if it’s back above $700 next week,” he said.

Institutional investors may have been selling some of their stakes in Tesla in recent weeks, but the regulatory forms that would reveal such sales won’t come out for weeks. Some big shareholders slashed their Tesla holdings last year. Baillie Gifford, a Scottish investment manager, and a long time Tesla shareholder, cut its position to just over 27 million shares at the end of last year, down from nearly 59 million shares at the end of June.

Tesla has long been a favored target of investors who aim to profit from declines in the price of stocks. Known as short sellers, they borrow shares and sell them, hoping to buy them back in the future at a lower price. If successful, short sellers can pocket the difference between selling and buying price, but the trades can also go horribly wrong if the share prices rises a lot, as happened recently with the shares of GameStop, the video game retailer.

As Tesla’s stock soared in recent years, short sellers would have lost billions of dollars on their bets, perhaps scaring some of them away from betting against Tesla, which has gained wide popularity among individual investors, many of whom revere the company’s chief executive, Elon Musk. In the middle of February, nearly 48 million Tesla shares had been sold short, according to the Nasdaq stock exchange, down from nearly 61 million shares at the end of 2020.

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