Tesla’s Stock Price Crashed, Bears Get a Voice!

Tesla’s (NASDAQ:TSLA) stock price fell by more than 25% last week. The stock underperformed the S&P 500 and the Dow Jones Index.

Mohit Oberoi, CFA - Author

Mar. 5 2020, Updated 6:08 p.m. ET

uploads///Tesla stock price TSLA
  • Tesla’s (NASDAQ:TSLA) stock price fell by more than 25% last week. The stock underperformed the S&P 500 and the Dow Jones Index. Meanwhile, NIO (NYSE:NIO) gained 1.2% last week.
  • Over the last four months, bears have been in oblivion. Also, Tesla’s short interest has fallen to historic lows. However, as the stock crashed last week, bears have come back growling.
Article continues below advertisement
Article continues below advertisement

Tesla’s stock price versus the S&P 500

Tesla’s stock price fell by more than 25% last week amid the coronavirus-led sell-off in broader markets. That said, the fall in TSLA stock was almost double what we saw in broader markets. Last week, the S&P 500 and the Dow Jones Index fell 11.4% and 12.3%. As TSLA stock rallied over the last four months, bears almost went into a coma. Tesla’s short interest has fallen to historic lows. Short sellers had to cover their positions. Their losses increased amid the surge in TSLA stock.

TSLA bears are back

Over the last few months, we haven’t heard anything from famed TSLA stock short sellers like Jim Chanos and David Einhorn. Bulls were in charge as Tesla’s stock price almost reached $1,000 earlier this year. Several analysts kept increasing their target prices as Tesla’s stock price moved up. However, after a short break, TSLA stock short-sellers are back. According to Value Walk, Stanphyl Capital bashed Tesla in its February investor letter. Stanphyl Capital said that Tesla does not has any “moat” and called it a “busted growth story.” The fund also said that Tesla will lose money from the middle of this year. Stanphyl Capital blasted CEO Elon Musk. Last year, Musk and Einhorn got into a Twitter war over Einhorn’s letter to Greenlight Capital investors. We’ll have to see how Musk responds to Stanphyl Capital’s letter.

Article continues below advertisement

Musk and Tesla’s higher stock price

Notably, Tesla also capitalized as its stock price soared. The company raised $2.3 billion through equity issuance last month—barely weeks after Musk denied the possibility. The higher capital would help Tesla as it opens the next Gigafactory in Berlin. NIO also raised capital last month. The company announced a preliminary partnership with the municipal government of Hefei, Anhui Province. While Tesla’s stock price soared after the announcement, NIO fell after it announced the issuance of convertible notes.

What’s driving the sell-off in TSLA’s stock price?

The broader market sell-off is contributing to the slide in Tesla’s stock price. However, after the spectacular rally, a lot of excesses got built into TSLA stock. The valuations might not look comfortable to “purists” who look at stocks from a one to two-year earnings perspective. However, to analyze Tesla, you have to look at the bigger picture and the electric vehicle story. Read TSLA Stock Crashed Due to More than Coronavirus to learn more.

Use our referral code for all New/Inventory Tesla models bought to unlock a referral bonus


Latest Tesla Motors Inc News and Updates

    Opt-out of personalized ads

    © Copyright 2024 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.