Tesla Stock Continues To Decline Despite Broader Market Rally
During Tuesday's session, Tesla stock dropped by 5% despite a broader market rally in the US equities. If we look at the major US indices, the general market reaction was very positive to the recent inflation data. But despite the signs of slowing inflation, the Tesla stock went in the opposite direction of the market and shed 5% of its value.
On a year-to-date basis, Tesla's stock is already down by 55% and was last seen trading around the $162 price level. Similarly, the market cap of Tesla is now close to $513 billion only - This is also down by almost 50% since the last of 2022.
If we look at the data from Bloomberg, Tesla stock is trading close to its 30x projected earnings. And it doesn't matter how we look at it; These are the lowest levels for the EV maker.
Twitter And Lower Chinese Demand Are The Culprits
But how did all of this comes down to this? There are many reasons, but the major ones are lower Chinese demand, Twitter's acquisition of Elon Musk, high inflation, and a general bearish trend in the US stock market.
However, there are also some experts who believe that Tesla has become a great stock for activist investors. In fact, these investors could also force Tesla into starting a stock buyback program.
Recently, Elon Musk also hinted towards a stock buyback program during the 3rd quarter earnings call. If this happens, Tesla will end up buying a portion of its own shares at a discounted price.
In fact, experts believe that we will see a share buyback program in a lot of other tech stocks, including Salesforce.
While we are discussing the Tesla stock performance, let's not forget Elon Musk's involvement with Twitter as well. Its been a few months since Elon Musk has been pouring money into Twitter by selling Tesla stocks which are also bringing the stock value down.