Tesla (TSLA) has been one of the most volatile stocks on the market in recent years, with its share prices skyrocketing in 2021 and then plummeting in 2022. The electric car company has seen its stock drop by over 50% in the past few months, with the stock closing down 11% on Tuesday. This has been a result of the numerous challenges and issues that the company has faced in recent times, such as production halts, high cash burn rates, and a volatile stock market.
One of the main reasons why Tesla (TSLA) has seen its stock prices drop is due to its high cash burn rate. Tesla has been burning through its cash at an alarming rate, and the company has been forced to raise additional capital in order to fund its operations. Furthermore, the company has seen its debt levels increase significantly in recent times, causing investors to be worried about the company’s future financial health.
Another issue that has caused investors to be wary of Tesla (TSLA) is the company’s performance in the stock market. Tesla has been one of the worst-performing stocks in 2022, with its share prices falling by more than double the decline in the Nasdaq. The stock is down 69% in 2022, and it has only seen one other year of decline in its history, an 11% drop in 2016. This has caused investors to be concerned about the sustainability of the company’s operations going forward.
The company has also faced numerous issues related to its global operations. Tesla has faced a fresh onslaught of COVID cases within its Chinese workforce, and its Shanghai facility recently faced a week-long production halt. Furthermore, Tesla has been forced to offer discounts in North America for buyers of Model 3 and Model Y electric vehicles in order to boost sales. This has caused investors to worry about the company’s ability to remain profitable in the face of such global challenges.
Finally, Tesla’s CEO Elon Musk has been at the center of a number of controversies in recent times. Musk has been selling Tesla stock in big chunks and has faced criticism for his erratic behavior on social media. He has also flip-flopped on policy changes and has welcomed back previously banned users on Twitter. All of this has caused investors to be concerned about the company’s future prospects and has led to a further drop in its stock prices.
In conclusion, Tesla (TSLA) is a bad stock to invest in due to its high cash burn rate, volatile stock market performance, global operational issues, and the controversies surrounding its CEO. Despite its recent sell-off, the stock is still much too expensive even if one is optimistic about the company’s future growth. Investors should be wary of investing in the company and consider other stocks that may have more sustainable long-term prospects.