Back to the Future. Tesla shares at the level of 2020
Dear clients,
Decline in Tesla Inc. accelerated on Tuesday, continuing their longest black streak since 2018. The announcement of a possible temporary shutdown of production in China due to new outbreaks of the disease raised doubts about the risks of demand.
Shares of Elon Musk's company tumbled down 11% to $109.10, the seventh consecutive drop and the sharpest one-day drop since April.
The news of the Shanghai production cuts comes on the heels of a report that Tesla is offering American consumers a $7,500 discount to ship two of its highest-volume models before the end of the year, adding to fears of declining demand. For Tesla, whose value depends on its growth prospects, these concerns represent a significant risk.
The hope that Tesla will become a leading company in an EV-dominated future led to an impressive eightfold rally in the stock in 2020, earning its place in the S&P 500 and at one point making it the fifth most valuable stock of the group.
In this year however, the manufacturer lost about $720 billion in shareholder value. The crash is one of the biggest drivers behind the S&P 500's decline in 2022 after Amazon.com Inc., Microsoft Corp. and Apple Inc.
However, the overall analyst stance on Tesla remains bullish, with the highest share of buy or equivalent ratings since early 2015. In their opinion, despite stock performance, Tesla's innovation curve is accelerating, in stark contrast to other big tech companies whose product updates seem stagnant at best.
A Rough Year
Dear clients,
Asian equities rallied while European and US stock futures fluctuated on the final trading day of a rough year for financial markets, with stocks and bonds posting their worst annual gains in more than a decade.
Stock benchmarks in Japan, Australia and China strengthened as S&P 500 contracts faltered, shading the best day this month for the index on Thursday, when it jumped 1.7%. The dollar rebounded from the previous session's decline, with Treasury yields rising and the yen rising as the Bank of Japan announced a third day of unplanned bond buying.
Uncertain direction is undermining hopes for a strong rally in late 2022, a year in which inflation has reasserted itself, wiping out a fifth of global equities in the worst performance since the financial crisis. Few regions have escaped the effects of Asian equities falling more than 19% this year. Bonds lost 16% in value, the biggest drop for a single leading measure since at least 1990, as central banks sought to slow consumer price growth by raising interest rates around the world.
Nasdaq 100 futures also fell sharply after the benchmark index jumped 2.5% on Thursday. The index has lost a third of its value this year as tech stocks have been among the most vulnerable to rising rates.
Concerns about the global implications of a rise in Covid-19 cases in China eased in part when Italy said it had found no new strains of the virus in recent arrivals from China. Italy and the US this week introduced testing requirements for air passengers arriving from China as a wave of infection swept through the world's most populous country.
At the same time, oil rose after a three-day decline due to concerns about increased inventories of raw materials and a possible decrease in demand from China, as a major importer.
Analysts are cautious about predictions, waiting for the next year to begin. Central banks fight against inflation and the resumption of trade in China are among the main benchmarks.