Tesla's Stock Is Forming A Bubble And New Buyers Should Buckle Up For A Crash

Bernstein downgraded Tesla's stock to underperform. With the cost of making batteries stubbornly high, Tesla has relied on stock and bond markets, along with government subsidies, to keep afloat. On Tuesday, Moody's Investors Service downgraded Tesla's credit rating, citing its output of the Model 3 and financial constraints.

But after an initial drop in the stock , the investing public decided that it knew more about Tesla's worth than the person running it. E-Trade said last month that its daily trading volume in April was more than 230 percent higher than it was a year earlier.

Tesla's stock is still one of the most shorted stocks on the stock market, though much less so than it was in the recent past. Elon Musk faces losing out on a $346m (£277m) pay package as Tesla's shares crash amid market chaos sparked by the coronavirus outbreak.

According to Fidelity data, in Q4 2019 they bought only 1.8 million Tesla shares net. Even though Tesla's outperformed the other two stocks on this list, it's just as risky of an investment to hold right now. That a prepubescent child is asking to buy shares of Elon Musk Tesla, which have increased by about 340 percent in the last year , is a subtle indicator that something other than a careful study of economic fundamentals is driving stock prices.

This brings up point number two: making electric cars isn't easy. In a blog post late Tuesday, Tesla said it still didn't know what caused the crash and that the car's computer logs had not yet been accessed due to the car's extreme damage. Tesla'˜s stock price crashed Friday morning after the company's maverick billionaire founder Elon Musk tweeted that he believed its price was too high.

Tesla's stock closed at $US274.96 on Friday, down from an all-time high of $US385 in September 2017. The hype from Apple and Tesla's stock splits was never going to last forever. In Q1 2020, when Tesla soared 400%, institutional investors were offloading Tesla stock in droves.

The question of Tesla's proper valuation divides analysts, but those whose firms tend to underwrite Tesla's stock issues and bond offerings are the most supportive. Investigation this year into a Tesla car crash. The $131-billion electric carmaker's stock dived as much as 12 per cent on Friday after the eccentric founder's Twitter handle exploded into a flood of random tweets.