By
Svetlana Soroka
April 18th, 2024
Tesla (TSLA) shares are now trading at $782.42. The stock has gained 171% in the past 12 months, and the current downfall is quite painful for the company.
Amid the spreading coronavirus fears, the situation on the market is worsening, with tech giants’ shares tanking. Even Tesla Inc (NASDAQ: TSLA) stock dropped greatly. The carmaker’s shares plunged by more than $100 in just two days. As we have recently reported, Tesla (TSLA) stock plunged more than 7% on Monday, closing down 7.5% at $833.79. The shares were a little up after hours but on Tuesday, the giant suffered another stroke. Tesla (TSLA) stock dropped by as much as 7.3% yesterday and closed down more than 4% for the day at $799.91.
During this period, the company has also shed about $19 billion in market cap. Currently, it makes up $147.495 billion. Notably, even with the drop, Tesla’s market cap surpasses General Motors Company (NYSE: GM), Ford Motor Company (NYSE: F) and Fiat Chrysler Automobiles N.V. (NYSE: FCAU) combined.
Tesla shares are now trading at $782.42. They have gained 171% in the past 12 months, and the current downfall is quite painful for the company. And it is unclear when this volatility will be replaced by a stable market.
Tesla Valuation in Question
Rapidly changing stock prices could not but affect Tesla’s valuation. However, the company sets hopes on its battery capabilities and productive partnership with CATL, China’s producer of cobalt-free batteries for electric vehicles. In April, Tesla will hold a battery event and reveal its battery strategy. According to Jefferies analysts, this “battery day” will be mission-critical for the company.
Notably, the analysts consider Tesla “uniquely engaged in a positive sum-game in the EV transition against legacy OEMs facing more severe strategic choices.”
They stated:
“Tesla has demonstrated a durable edge over competitors in energy (density and management) and connectivity and appears to have reviewed competitive technologies in detail in addition to pursuing its own development. Tesla is in a position to grow into a supplier to other OEMs.”
However, as far as valuation is concerned, Tesla is in threat because of volatility in shares. Investors are worried that after coronavirus is over, it will take a lot of time for car producers to rebound in sales.
The Jefferies analysts said:
“We still need valuation to be grounded into some visibility on market size and potential profitability.”
Tesla’s effective mount of 2020 has turned into losses and uncertainty. Some believe that the recent drop is not only the result of coronavirus but also a normal state of things. According to some analysts, after soaring and turning into a kind of bubble, Tesla stock needed a big correction. Other tech companies are suffering as well, but for Tesla, the burst and plunge of shares are most painful.
Winners in Light of Coronavirus Concerns
Sounds unbelievable, but in the situation given, there are companies that manage to run smoothly and even make a profit. While the majority of the stocks on the market are falling, tech company Virgin Galactic Holdings (NYSE: SPCE) has managed to maintain its stock price level and rise slightly.
On Monday, Virgin Galactic stock experienced an uptick of 8% and closed at $34.29. Yesterday, at the pre-market, the price reached $37.02. The stock has already more than tripled in 2020, and institutional and retail investors enthusiastic about the prospects of Richard Branson’s space transport company.