21 percent price loss in one day: For late-breaking investors, it can be expensive to rely on innovators like Tesla while imitators are pushing into the market.
NAfter the electric car manufacturer’s share was not included in the prestigious S&P 500, even though the company closed four quarters with a profit as required, the share price fell as deeply as it has probably never been in a day.
So far, Tesla investors have never cared about whether their company receives official ennoblement, for example by being included in an industry-heavy index that, according to pioneers such as Tesla founder Elon Musk, only reflects the economy of the previous century. Instead, the image of an outsider even had a nimbus.
So why does what, at first glance, seem small, such as the denied entry into the S&P 500 stock market index, which is steeped in tradition, has such a disastrous effect on the share price? Wasn’t the company rushing from one stock market record to another just a few days before the break-in? One reason for the drastic price reaction of minus 21 percent could be that investors are becoming more and more aware that even an exceptional phenomenon like Tesla will not grow indefinitely.
Tesla’s unique position is crumbling
That doesn’t suddenly make the Tesla share a bad investment, especially since the price is still a fabulous 295 percent plus even after the slump on Tuesday compared to the turn of the year. Investors who got in much later, however, are now sitting on high losses.
In such situations, arguments come to the fore that can even put the unique position of an extraordinary company like Tesla into perspective. The efforts of classic car manufacturers show that they too will soon be able to put electric vehicles on the road on a large scale and gain market share in this segment.
Even if Tesla is likely to keep the image of the pioneer forever, there will be many car buyers for whom this is not the decisive argument. Many choose a BMW, Mercedes, Audi or Aston Martin because they like the brand – or because mass manufacturers such as Volkswagen or Toyota offer electric alternatives at lower prices than the original.
Alternatives are not only coming into focus for electro-savvy car customers. Even on the stock exchange, it is no longer just Tesla shares that offer investors access to the electrical segment. The Tesla competitor Nikola, who specializes in electrically powered trucks, is currently making a name for itself thanks to an alliance with the car company GM. Nikola has also recently been listed on the stock exchange. And who says that a traditional car manufacturer won’t soon be spinning off its innovative electronics division and going public?
Despite everything, Tesla and its charismatic founder will keep their place in world history. Elon Musk’s historic merit is undeniable. He has proven that electric cars can be a sought-after product for wealthy customers.
Tesla’s cars are also on the streets in Germany and have become part of everyday life. That first sparked interest from broader customer groups, but Tesla will not benefit from their demand alone. Free riders will get their share of the cake. That is the difficult lot of the innovator who paves the way for others as well. For this reason, it can be expensive for investors to rely on the pioneer in an industry alone.
It was not so much the planned economy subsidies and bans by politics that got the sluggish manufacturers of classic automobiles to finally invest in alternative forms of drive. No, it was the attack by Elon Musk who was initially ridiculed and then feared as a competitor.
This fear apparently ensured that even at the state-owned German car company Volkswagen, electric cars became a top priority. The fact that Tesla’s share price began to plummet in the week when Elon Musk paid a visit to the VW headquarters in Wolfsburg on his tour of Germany set a symbolism that the stock market could not avoid. When, of all things, the VW works council chief, who is not exactly known as an electric innovator, spoke of progress in the development of German electric cars in an interview published after the Musk visit, the VW share even turned up 4 percent, while in America the Tesla Stock flew out of many depots.