To The Moon

$Tesla Motors(TSLA)$ Tesla, which once had a total market cap of more than $1 trillion, has now fallen below $400 billion and is being chased by $Tencent Holdings. In the past year, there has been a major reshuffle of global technology companies.

As of December 23, Tesla's total market cap was US$388.87 billion, and its share price has dropped by 65.03% so far this year. The company's ADR market capitalization is US$380.739 billion, and its share price has fallen by 28.73% so far this year.

The company's stock price has fallen by a much smaller amount than Tesla's in 2022, but in 2021, the single-year decline is significantly larger than Tesla's. The company's stock price has fallen by a much smaller amount than Tesla's in 2022, but the company's stock price has fallen by a much larger amount than Tesla's in 2021. For example, in 2021, Tencent ADR is down 23.74%, while Tesla is up 49.70% in 2021. However, in terms of cumulative decline since 2021, Tencent ADR has fallen 59.49% over the two-year period, but the largest cumulative decline has been 75%. Tesla's cumulative decline over the two-year period is 70.78%. This shows that the cumulative maximum decline between the two is similar, but Tesla's decline is significantly larger than Tencent's in terms of the year-to-date decline.

The company's share price has fallen significantly for its own reasons as well as the influence of the overall market environment. In 2022, in addition to Tesla, including Meta platforms, Google, Amazon and other well-known technology giants, there are different degrees of decline trend, technology giants share price cut became the normal phenomenon.

Behind the sharp decline in Tesla's share price, there is a great linkage with the trend of technology stocks, 2022 is called the year of the global technology stocks bubble squeeze, but the A shares of Hong Kong shares of technology stocks bubble squeeze a year earlier than the U.S. stocks, the final U.S. stocks of technology giants still can not escape the results of the bubble squeeze. However, behind the bursting of the U.S. technology stock bubble, to a large extent, is related to the factors of the Federal Reserve's sharp interest rate hike, behind the Fed's sharp interest rate hike, the rapid rise in market interest rates, the global market risk appetite has changed to a large extent.

Throughout this round of the global technology stock bubble burst process, there are often some common features. For example, the higher the valuation of technology stocks, the faster the valuation squeeze. The more unreadable the concept of Internet technology stocks, the greater the share price decline. In addition, the higher the pledge ratio of major shareholders, the greater the leverage risk of technology stocks, the greater the strength of the bubble squeeze.

Tesla shares fell sharply from $414.50 to $121.02, a cumulative drop of up to 70%. The company's total market value fell from US$1.1 trillion to US$388.8 billion. It took three Tensons to cover one Tesla, but now the market value of one Tesla is not as high as the market value of Tenson.

The plunge in Tesla's stock price, in addition to the accelerated de-bubbling of technology stocks, is also related to a series of Musk's actions this year.

After Musk became the world's richest man, his business ambitions quickly expanded and spent a lot of money to acquire shares of Twitter. The company's main goal is to provide a solution to the problem.

If you sell directly from the capital market to cash out, Musk does not have to bear the risk of leverage and can easily take profits to meet the funds needed for the acquisition of Twitter. If Musk raises money by pledging shares or selling put options, he faces greater risk.

For example, selling a put option could yield some royalty income for Musk. However, the strike price of the put option has a direct impact on the risk of the entire transaction. If Musk sets the strike price at $300, then if the stock price stays above $300, Musk can easily earn royalties and the trade is automatically completed at expiration. However, if Tesla's stock price continues to fall and falls below the $300 price on the exercise date, Musk will need to prepare a sum of money to meet the $300 exercise price, and if he fails to do so, he will face a greater risk of exercising his options, testing Musk's capital position.

If a pledge is involved, then it is time to look at Mask's liquidation warning line and liquidation line. If Musk is unable to replenish the pledge or does not have sufficient funds to meet the need to close out the position, then he will face the risk of forced liquidation.

The company's business is still in a competitive position in terms of production and sales volume. In the context of the fundamentals have not yet deteriorated, perhaps the company's share price is affected by some of the capital institutions sniping. In addition, Musk's series of operations, the market capital voted with their feet, which became the trigger for the accelerated decline in share prices.

From Tesla's point of view, the biggest problem facing the market is to solve the pressure of concentrated selling. In the background of the unbalanced strength of buyers and sellers, Tesla needs to have sufficient buy-side funds to hedge the risk of concentrated selling of funds, of course, Musk and the consortium behind it, also need to do something to achieve the purpose of stabilizing market investment confidence and stabilizing market investment sentiment.

Musk promised not to reduce holdings in 2 years, or just the first step to stabilize the stock price. Next, Tesla also need to have more substantial measures to stabilize the stock price, such as behind the consortium's shareholding measures, share buyback cancellation measures, etc., at least to the market to see the company's confidence in protecting the market, which may be an important measure to gradually stabilize the stock price.

The company's share price has rebounded by 50% after a 75% drop in Tencent's share price, which is also a reversal of the market's investment sentiment. For Tesla, one of the world's technology giants, a 70% drop in share price is not a normal market phenomenon either. In the background of the fundamentals have not materially deteriorated, it is more likely to be related to market fears, concentrated selling of capital and other factors. From the perspective of price speculation, Tesla's continued irrational downside may not be a bad thing, once the market investment sentiment bottomed out and reversed, the stock price will also have a need to rebound.

@MillionaireTiger @TigerStars @CaptainTiger