It has been a very rough ride for Tesla stock over recent months.
Yesterday's New York trading session was another case in point as Tesla stock declined in value to $109.1 per share, representing its lowest point in over a year, by a considerable margin.
Over the course of the past 12 months, Tesla has lost almost 70% of its value despite its vehicles remaining extremely popular worldwide.
What is very interesting about disruptors such as Tesla is that there appears to be a huge value in suspense and speculation.
Back in 2014 when Tesla began to make its first assault against the established motor industry which was already over 120 years old and extremely conservative - motor vehicles were still using internal combustion and there was no interest in moving away from it - which is the same type of motive power that the very first car used back in 1886 after Karl Benz committed his life's work to building a carriage which does not require a horse.
Just as Karl Benz was a disruptor back in 1886, a time when some people thought his 'horseless carriage' was very dangerous as it reached speeds of 9 miles per hour and was driven by mechanism rather than pulled by a horse, there was equal dissent at Elon Musk's fully electric 'Model S' luxury car of 2014. However, the adoption cycle was much quicker this time. Karl Benz did not live to see the success of his invention; it took Louis Chevrolet and Henry Ford to popularize it via mass production techniques which reduced the cost of manufacture and allowed people with averag means to own a motor vehicle, the same was not the case for Elon Musk's Tesla company.
Within just a couple of years of launch, owning a Tesla was a status symbol. It marked out its driver as forward-thinking, technologically astute and uber cool. Suddenly everyone wanted one, and the traditional automotive industry started developing hybrid and fully electric versions of their existing cars.
The hype was huge. Tesla could do no wrong. It had no pedigree, and came from outside the car industry. Usually that is a recipe for disastr as luxury and premium car buyers want prestige, a long racing history associated with their chosen marque and a tradition of style and quality. Tesla had none of those attributes, but was a car which looked and behaved like any existing luxury car, but was electric. You could appear to be 'green' as well as fast. The motoring press marvelled at the silence and instant acceleration.
When Tesla listed on the NASDAQ exchange, an exchange synonymous with technology and Silicon Valley giants, it went viral. By 2020, Tesla was among the highest market cap companies in America, and was in the same league as Amazon, Apple and Google (Alphabet) in terms of stock market stability. It effectively led the markets alongside the big tech giants.
Then came Tesla's foray into cryptocurrency investment. Just at the time when Elon Musk was styling himself as a cryptocurrency influencer, he brought Tesla, by that time a hugely capitalized mainstay of the NASDAQ exchange, into Bitcoin investment to the extent that it became the first publicly listed company in the world to become a 'crypto whale'. Crypto Whale is a term used to describe an entity that holds enough digital currency to significantly influence market prices by trading significant amounts of coins.
All of this endless disruption and creation of speculatory suspense has been very good for Tesla.
However, nowadays competition from established car manufacturers is huge, and in many cases the product is far better than that of Tesla. Tesla has flooded the rental car and leasing markets with its lower-range models, and is no longer considered the prestigious rarity it once was. Used car prices have held up well and the market for German, Japanese and Swedish luxury cars with hybrid or fully electric power is huge, with waiting lists in some cases.
Elon Musk's concentration on Twitter, which has resulted in equal levels of volatility, has diluted the perception of the public of his 'Mr Tesla' persona, and Tesla cars being viewed as taxis with Uber signs on the side, have become to some extent overshadowed by Porsche, Volvo and even Bentley which now offers a hybrid version of its Bentayga SUV.
It is not to do with lockdowns or government policy either. Elon Musk is very anti-lockdown and railed against Western government policy forcing firms to adhere to climate or Covid narratives. He even moved the entire company's headquarters to Texas from California to avoid what he considered to be left wing government interference in his business, and to avoid future lockdowns.
Whether we are seeing a normalization of electric vehicles and Tesla is just becoming a standard maker of electric cars, or whether Tesla has lost its edge as a disruptor are open for debate, but certainly its low stock value compared to any period this year is an interesting direction for a company which just 5 years ago was on a massive pedestal as 120 year old car companies rallied to pay attention to the sudden change in a once-conservative automotive industry.
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