Is Tesla on the verge of a stock market crash?

Is Tesla on the verge of a stock market crash?

At the time of writing, May 25, 2022, Tesla has a stock market value of 640 billion euros. Toyota, the second best-rated carmaker in the stock market, has a value of “only” 207 billion.

In 2021, Toyota sold 10.5 million cars. Tesla broke its record by producing 930,422 pieces. Again, these valuations reflect Tesla’s sharp decline since the beginning of spring, as the company was valued at around $ 1,000 billion on April 4.

How to explain such a high stock market value compared to the company’s actual sales? According to the New York Times, that would have to be justifiable “Controls the automotive industry in the same way that Apple controls smartphones and Amazon controls e-commerce”. This is not the case – far from it.

For investors, it’s all about potential. And for many, the Tesla is endless. The company has not limited itself to making the electric car a sought-after product: it continues to innovate, especially in the field of automatic piloting.

When all is well, Elon Musk is Tesla’s biggest asset. The richest man in the world is doing better than anyone else to get the media’s attention, and many investors see him as a visionary who is constantly looking for a new technological challenge to face.

Only when everything goes wrong will the charismatic billionaire quickly turn into a thorn in the side. As the technology industry collapses, Wall Street wonders if a cold-blooded board could be better than posing for a CEO trying (or not) to buy Twitter while his company is unscrewing the stock market.

Stay without dominance?

The slow market, racial discrimination litigation and slow production are leading investors and some observers to ask: Are Tesla’s prospects for development really that great? Consumers are certainly increasingly convinced of electricity, but competition is fierce.

In the United States, where Musk and his company are extremely popular, consumers are ready to wait for their Tesla months. Only, “The next generation of buyers will be the average person who buys electricity because it is cheaper, a New York Times analyst predicted. The Tesla brand image will be less effective.

All this leads the market to reconsider the company’s prospects, even if it means considering a brutal return to the ground. This is reminiscent of the scenario that overthrew WeWork in 2019.

The start-up, which leases coworking facilities, had a high-ranking CEO, capitalization of $ 47 billion business plan a little too ambitious: after a dizzying collapse, the company is now worth 4.8 billion.

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