Although one-year Tesla stock figures look good, 5-day, 1-month, and year-to-date movements are currently taking the heat, despite Bitcoin purchases.
Tesla Inc (NASDAQ: TSLA) Is experiencing a considerable market downturn as the company’s stock has not maintained achieved increases from Bitcoin investments. The Elon Musk-led electric car maker has recently been trading in red, somewhat depleting gains from heavy crypto investments. Specifically, the Tesla market cap has lost $277 billion in a little over a month.
Last year, Tesla saw heavy selloffs in March and December as well. The current plunge is the third time the automaker is entering a bear market over the past year. Tesla stock is currently at an after-hour price of $567.99 after rising only 0.89%. At $563, its last close was a 5.84% plunge, fueling a crash of almost 22% in the last 5 days. Over the last month, TSLA lost about 35%, with a year-to-date 20% crash. However, the company’s 12-month figures still look healthy. In the last one year, TSLA has surged nearly 363%.
Tesla’s drop may be tied to worries about the company’s heavy valuation, along with growing competition. Other automakers such as Nio and General Motors are looking to give Tesla a run for its money as they continue to produce electric-vehicle offerings. Tesla is also facing a global shortage of computer chips. Last month, the company temporarily closed its Fremont, California factory, due to what Musk described as a “parts shortage.”
The plunge might not exactly be a TSLA problem. For instance, the shortage of chips is a problem other automakers continue to grapple with. Furthermore, the entire Nasdaq Composite has lost 9% in the last month. Nio Inc (NYSE: NIO) and Nikola Corp (NASDAQ: NKLA). Both lost 38% each, with Li Auto Inc. Losing 30%.
Tesla Stock and Bitcoin Purchases
Tesla currently holds a considerable amount of Bitcoin. Early last month, Tesla made the news after revealing its $1.5 billion bitcoin investment. In a filing with the US Securities and Exchange Commission (SEC) filing, the automaker said the purchase was borne out of an updated investment policy. The filing further explains that the policy allows Tesla to pump some of its cash into alternative assets, such as cryptocurrencies, gold-exchange funds, and gold bullion. Along with the company’s plan to begin receiving Bitcoin payments, Tesla’s move is said to have sparked a crypto purchase culture among potential institutional players.
The Bitcoin purchase and the jump in Tesla stock seemed to ignite the general stock market. The Dow Jones Industrial Average (INDEXDJX: .DJI), S&P 500 (INDEXSP: .INX), and the Nasdaq Composite all rose. Consequently, Bitcoin billionaire Tim Draper thinks that other major companies could join Tesla in the Bitcoin market. Specifically, Draper believes both Netflix Inc (NASDAQ: NFLX) and Apple Inc (NASDAQ: AAPL) could be next.
On Apple, Draper believes the company has a little too much cash to not do something with it. Speaking at the 2021 Montgomery Summit, Draper said:
“Apple has so much cash. If they don’t buy something with that, their shareholders are going to naturally drift lower in the value of that asset over the next three or four years…”
Draper also believes Netflix could enter the market because the company’s co-CEO, Reed Hastings, is “innovative.” On a recent Unstoppable Podcast episode, he said:
“If I’m the CFO of one of those big organizations, I am saying ‘we have to own x% in bitcoin because it’s a hedge against another currency becoming the currency of the future, and it’s also a hedge against inflation.”