Tesla Inc. stock went up. entered the bear market Tuesday and a few analysts took that on a recent Silicon Valley electric car maker’s bet on bitcoin.
Tesla TSLA,
shares are about 22% off their record close. A bear market is usually defined as a decline of 20% or more from a peak. For Tesla, closing would be less than $ 706.47, which is 20% off Jan’s record. 26 close, meets that criterion.
See also: Why did Tesla buy bitcoin?
Tesla was last in a bear market in September, around the time the stock was split, news that a major shareholder had sold some of its assets, and a stock offer.
“This withdrawal began after Tesla decided to buy $ 1.5 billion of bitcoin,” Garrett Nelson told CFRA to MarketWatch. “While Tesla used a very small percentage of their total cash to make the purchase, investors are questioning their future growth strategy. ”
The sale gained momentum Tuesday after news late Monday that Lucid Motors plans to go public following a merger with a white check company, he said. The understandable valuation of the deal of about $ 24 billion “sees it as a huge disappointment” and as showing a negative impact on Tesla and other EV upstarts, Nelson said.
American investment receipts of Nio Inc., based in China, NIO,
XPeng XPEV,
and Li Auto Inc. LI,
as well as shares of Nikola Corp. NKLA,
did not do much better on the overall market Tuesday.
In Tuesday’s note, analyst Dan Ives agreed with Wedbush with the bitcoin bond and the last few days of “zero” decline for the shares, adding another reason to himself.
Tesla is pigeon “into the deep end of the age” with its bitcoin bet and “the company’s stock is now closely tied to this digital currency,” Ives said. In theory, the investment is relatively small and would not move “the needle for Tesla,” he said.
“However, there is a real understanding of the Street and of Musk and Tesla strongly
accepting bitcoin (from an operational perspective as well), investors are starting to
to tie bitcoin and Tesla to the hip, ”Ives said.
“While Tesla made a paper of around $ 1 billion on bitcoin in the last month over its EV profits from 2020, the recent 48-hour sale in bitcoin and volatility are in addition to some investors sent out to the uprisings, ”he said. The big concern is that the “bitcoin side display” goes over Tesla’s entire EV growth story.
Tesla is halting sales of the Model Y at the lowest price along with ongoing price cuts have led to concerns about street demand as the bears are coming out of hibernation mode, Ives said.
Tesla’s quarterly sales figures appear to be driving the stock up and resolving some of those concerns, he said.
In the meantime, it’s ‘buckle up the seat belt time’ again for Tesla stock with it
more variability on the horizon, ”said Ives.
Tesla shares have added 279% in the last 12 months, compared to gains of around 15% for the S&P 500 index.