Hey Guys,
I’ve always maintained that Bear market capitulation is not reached once or until Bitcoin and Tesla have corrected in a significant mean-reversion. It’s been slower than I thought it would be in 2022, but it’s happening and 2023 will be worse.
Elon Musk’s acquisition of Twitter for $44 Billion was a significant error. Meanwhile we’re still waiting for Tesla’s FSD, that supposed to work but never did, as advertised. Tesla's market capitalization has plunged from over $1.2 trillion to $530 billion in the past year.
It’s current market cap is $536 Billion, but it’s clearly not a company worth that much. TSLA 0.00%↑. It’s really just basic math compared to other automobile companies. Tesla trades at a P/E of 52, just comical compared to the reality it’s having in 2022 and will have in 2023.
Tesla’s stock is down 57% year to date, but it’s still significantly over-valued. Elon Musk as a cult of personality figure doesn’t help its cause. Here is a Tycoon waiting to have a very difficult 2023.
Tesla's $670 billion decline is roughly equivalent to three Disneys, four Nikes, or six Starbucks.
The automaker’s stock appears to have lost momentum, and Tesla CEO Elon Musk selling tens of billions of dollars’ worth of shares over the last year did not help.
In fact the credibility of Tesla is falling apart. Tesla has issued back-to-back recalls, according to the National Highway Traffic Safety Administration.
Elon Musk saw his wealth plummet by $100 billion dollars this year, bringing his net worth to somewhere between $170 billion and $182 billion, according to estimates from Bloomberg and Forbes. Yet is increasingly unhinged behavior acquiriing Twitter, selling Tesla shares and pushing his own (political and pro-China) agenda, is getting some Tesla investors worried.
Tesla has now recalled almost 4 million vehicles in the U.S. so far in 2022. That’s more than the company has ever sold in the U.S, it’s a tremendous success story with a tremendous amount of competition competing especially in China. Tesla is a feel-good story in the stock market bubble of 2020/21, but the biggest bubbles also fall the hardest, just as Cathie Wood.
Tesla investors have other things to worry about, such as the stock’s recent performance. Tesla shares are down about 55% from their 52-week high, affected by everything from rising interest rates to supply-chain problems to competition from other EV makers.
Musk reportedly owns around a 15 percent stake in Tesla shares which has decreased by 58.03% year to date, according to Bloomberg. Musk will have to keep selling Tesla shares due to the financial situation of his other companies, their debt and Tesla’s own volatile place as the savior of the EV world and hope to build general purpose mass-produced humanoid robots, an expensive proposition to say the least.
Retail investors are not correctly judging the risk of holding Tesla shares due to their love of their Demi-God and Twitter influencer personality. Many companies are going to go bankrupt in 2023, which is widely seen as a tech startup corporate graveyard. Tesla accounts for the bulk of Musk’s fortune but has faced revenue decreases due to the ongoing covid-19 restrictions in China and a recent recall of 300,000 Tesla vehicles due to faulty taillights in addition to soaring costs of materials. Luckily Tesla is very profitable, but as competition comes on all sides, what if those sales don’t scale well into the EV future?
Tesla’s stock patterns since April, 2022 doesn’t look so great, in fact it looks like Bitcoin’s chart.
Tesla
Bitcoin
The only difference in terms of mean reversion to value, Tesla’s stock is actually plummeting faster than Bitcoin is correcting in its own supposed crypto winter phase in its macro cycle.
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