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Elon Musk
Scott Olson / Getty Images
That news
Tesla
a Chinese problem may have rolled the stock a bit Friday.
China is, after all, important to every electric vehicle manufacturer, and Tesla is the most valuable EV manufacturer of all. Now CEO Elon Musk has addressed the issue. And he doesn’t seem too worried.
On Friday, The Wall Street Journal reported that the Chinese government may stop driving Tesla vehicles (ticker: TSLA) due to national security concerns. The timing of the controversially devolved U.S.-China talks in Alaska took place back and forth on human rights and democracy.
Tesla stock fell early in trading on Friday, but ended the day up about 0.3% while the
Nasdaq Composite
received 0.8% and the
S&P 500
fell a little.
Reuters reported Saturday that Musk told a Chinese audience that his company has a strong incentive to be very careful with any information that may be collected by the company or by hackers. sensors and cameras on his cars.
“If Tesla used cars to drive in China or anywhere, we would be shut down,” Musk told Reuters.
For the stock, the issue with the Chinese government seems small, but investors need to keep going because China is critical to the company’s success. China is the largest market for new cars and new EVs. Wedbush analyst Dan Ives cites China as the foundation of the company’s future growth. It ranks Tesla and Hold stock and has a $ 950 price target for shares.
“At a time of white tension between the US and China, Musk & Co. in a special situation – along with
Apple
– of being caught in the crossbar, ”Ives wrote in a report on Friday. He said that while he did not expect the situation to spiral out of control, he was closely monitoring developments.
Tesla shares are down a few weeks ago, but not because of geopolitical tensions.
Higher interest rates have hurt Tesla stock. High rates hurt high growth stocks like Tesla more than others. For starters, higher interest rates make it more expensive to fund growth. Second, high-growth companies generate most of their cash flow in the future. Higher rates promise a slightly more attractive future, roughly speaking, than higher yields from today’s bonds.
Tesla shares are down about 7% year to date, lagging behind comparable yields of the S&P 500 and
Dow Jones business average.
Shares of it are around 27% from their 52-week high in January. Yield on Finance’s 10-year note recently rose over 1.7%, up about 0.5% from a few weeks ago.
Write to Al Root at [email protected]