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Tesla - volatile price movements
14 Oct 2022 (346 views)  

Tesla hit a market cap of $1,200 billion on 1 Nov 2021. It has since dropped by 44% to $673 billion.

The key reasons for this sharp drop are:

a) Elon Musk purchase of Twitter for $44 billion. This required him to sell a big holding of Tesla's stock to fund the purchase. There was also concern that he would be distracted from running Tesla, when he had to pay attention to Twitter. 

b) The sharp drop in prices of tech stocks due to the hiking of interest rate in America, which started in March 2022. 

I present the following comparison of the price movements for the big tech stocks over the past 6 months:

Facebook -39.40%
Tesla -34.94%
Amazon -27.65%
Google -23.47%
Microsoft -18.65%
Apple -16.09%

Tesla's market cap recovered to $932 billion on 5 Sept. From there, the market cap dropped by 28% over 5 weeks to $675 billion. The main reason was the decision by Elon Musk to proceed with the purchase of Twitter, after his earlier announcement to abandon the deal. 

The Twitter purchase damaged the stock price of Tesla on two occasions, when it was first announced on 14 April and when he announced on 5 Sept to proceed with the deal. 

Tan Kin Lian


Tesla - volatile price movements
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Tesla hit a market cap of $1,200 billion on 1 Nov 2021. It has since dropped by 44% to $673 billion.

The key reasons for this sharp drop are:

a) Elon Musk purchase of Twitter for $44 billion. This required him to sell a big holding of Tesla's stock to fund the purchase. There was also concern that he would be distracted from running Tesla, when he had to pay attention to Twitter. 

b) The sharp drop in prices of tech stocks due to the hiking of interest rate in America, which started in March 2022. 

I present the following comparison of the price movements for the big tech stocks over the past 6 months:

Facebook -39.40%
Tesla -34.94%
Amazon -27.65%
Google -23.47%
Microsoft -18.65%
Apple -16.09%

Tesla's market cap recovered to $932 billion on 5 Sept. From there, the market cap dropped by 28% over 5 weeks to $675 billion. The main reason was the decision by Elon Musk to proceed with the purchase of Twitter, after his earlier announcement to abandon the deal. 

The Twitter purchase damaged the stock price of Tesla on two occasions, when it was first announced on 14 April and when he announced on 5 Sept to proceed with the deal. 

Tan Kin Lian