Tesla pessimists have finally benefited from CEO Elon Musk. A year ago, Tesla’s stock price was high on the rosy outlook for the global electric vehicle market, but now the market is measuring how far the bottom of Tesla suffer is.
Citing financial information company S3 Partners, the Wall Street Journal (WSJ) reported on the 21st (local time) that investors who short-sold Tesla shares earned a total of $15 billion this year.
Short selling is an investment technique in which stocks are borrowed and sold and later bought and repaid at a lower price, and profits are made only when the stock price falls.
Tesla’s stock price has plunged more than 60% since the beginning of the year to the level it was two years ago. Concerns over a slowdown in sales of premium electric vehicles due to concerns over an economic slowdown have led to doubts about fundamentals, and Musk’s frequent rumors after the Twitter acquisition have weakened investor sentiment. It was also a negative factor that Musk sold a stake worth $40 billion over the past year to raise funds for the Twitter acquisition.
The problem is that Tesla is likely to suffer in 2023.
Andrew Left, founder of Citron Research, told WSJ, “It was not an easy way to become a tesla stock price declineist,” adding, “Tesla is still expensive.” The decline is not over yet,” he said.
Only this week, Wall Street is lowering its level of interest in Tesla, with Investment Bank (IB) Evercore ISI lowering its target stock price from $300 to $200. According to Bloomberg News, Tesla’s target stock price, which once rose to $330, has fallen to $259.
The generous evaluation of the valuation premium is also weakening. Currently, Tesla’s 12-month earnings ratio (PER) has fallen to 27 times, similar to the Standard & Poor’s 500 average (about 18 times). The company’s share price return ratio was more than 1,000 times higher in April last year, but now reality is more important than the future.
Jeffrey Osborne, a researcher at Cowen, a market research firm, pointed out to Bloomberg, “The perception that Tesla is a leader in the electric vehicle sector is disappearing,” adding, “I don’t know what to expect in 23.” Bruce Khan, portfolio manager at Shelton Capital Management, also said, “Investors expect Tesla’s electric vehicle production capacity and sales to increase remarkably, but it is not the reality yet.”
Nevertheless, individual investors still have not withdrawn their support for Tesla, or to be exact, Musk.
According to Bandari Research, U.S. individual investors bought about $15.2 billion in Tesla shares this year, beating Apple to buy the most.
“Tesla purchases are on the decline across the market, but some investors are continuing to make religious purchases,” said Lucas Mantle, a researcher at Banda Research.