Tesla's Bleak Month Continues, but Is It Really That Bad?


Share price volatility has been synonymous with Tesla for many years now, the company's unique, somewhat giant character echoing the polarising nature of its founder and CEO, Elon Musk.

An unusual company among its big-cap peers, Tesla is one of the most popular stocks on the global market, its volatility offering a diversion from steady, conservative bricks-and-mortar companies, which often dominate the top-tier blue-chip contingents of well-respected indices.

Since 2024 began just two weeks ago, Tesla shares have been declining in value at a rate that is relatively rapid for a firm whose stock is listed on a major exchange and whose peers are the 'Magnificent 7' tech firms which dominate North America's tech stock environment.

Indicative pricing only

On December 28, 2023, FXOpen charts showed Tesla stock to be trading at $264 per share; however, as the new year began, Tesla started to decline and has continued on that trajectory thus far, arriving at $218.55 by the earliest hours of the European session this morning according to the FXOpen chart.

Some reports cite that Tesla stock has fallen by as much as 12% since the start of the year and allude to a 'sell-off' by many investors.

This is a very interesting period of volatility for Tesla, especially given the bullish trend towards tech stocks in general during the course of last year, in which they collectively rose from the doldrums that blighted the tech stock market during 2022 and doubled in value during the course of 2023.

Tesla was very much part of that wave, its own stock reaching $295 in the middle of July last year, but unlike some of its Silicon Valley counterparts, Tesla's rally was relatively short-lived as its stock was worth around $214 just one month later on August 18.

It has been experiencing a series of ups and downs since. However, this year's sustained decline is very interesting given that the United States is now being viewed by many fiscal experts as a potentially good place to do business for large corporations in the year ahead, given that inflation is now well under control and the central bankers may look to loosen the monetary policy, allowing companies such as Tesla to have the spare capital to build more cars and commit resources to even stronger marketing, whereas that capital would otherwise be tied up servicing monthly commitments.

There are some interesting comparisons to be made regarding the beginning of each year since Tesla has been in business. Part of Tesla's success as a corporate entity is due to its unique achievement in coming from outside of an ultra-conservative, long-established global industry which has charted the same course for over 120 years and suddenly disrupting it to the extent that almost every single vehicle manufacturer in the world has begun following Tesla's lead in going down the electric vehicle route.

Even Rolls Royce launched a fully electric vehicle of its own at the end of last year.

Thus, the faith in Tesla as a corporation is largely rooted in its ability to turn a gigantic, global manufacturing industry on its head and lead the way, despite only having been in existence for a fraction of the time of the motor industry stalwarts, most of which trace their origins back to the end of the Industrial Revolution.

The beginning of 2024, however, is the fourth worst start to a new year experienced by Tesla since it took its stock onto the NASDAQ exchange 13 years ago. A previous example occurred in 2012 when Tesla stock lost 20% of its value in the first nine days of trading in that year; however, back then, Tesla was a totally different company. It was new; the range of mainstream cars that now dominate the streets of every city and town almost everywhere in the world did not exist, and the public and the motor industry itself were unsure of the future of pioneers in electric vehicles, rating Tesla at the time as an outsider, an eccentric upstart which could fizzle out at any moment.

The boardrooms of Ford, GM, Toyota and Volkswagen, some of the world's largest motor manufacturers, were likely calm and unconcerned by Elon Musk's apparently idiosyncratic attempts.

Those days are long gone, however, and Tesla is a tour de force these days; therefore, to lose 12% in the first two weeks of 2024, representing a similar situation to that of 2012 when it was a fledgling, is very interesting.

Some analysts are looking at Tesla's reduction in the prices of its vehicles on the Chinese market as a possible reason for the decrease in share prices, while others argue that rental car company Hertz is selling one-third of its electric vehicle fleet, creating a possible theory that electric vehicles are not ready for rental car fleets. Some of its Model 3 cars are being sold for as little as $14,000 per car in the United States.

Overall, however, this is a smokescreen because American car buyers bought 45% more electric vehicles in 2023 than the previous year.

When looked at over the course of a year, Tesla stock may well be down in value over the last two weeks, but it still is not as low as it was during the spring of 2023 when it reached $154.10 at the end of April 2023, and 2023 was a year of overall growth in share price for Tesla.

Indeed, volatility is a core attribute of Tesla stock, just as disruption is in the nature of its founder in every walk of life.

It's an interesting one to watch, in that case.

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