Tesla stock has dropped by more than 40% this year. Can stocks be a catalyst for change?
Investors are hungry for any kind of good news after Wall Street's brutal launch in 2022. Inflation is high, consumer sentiment is deteriorating, and the market is volatile. Few events attract the attention of traders such as the blockbuster stock division. And while the stock split does not have a direct impact on the company's core value, the consequences associated with that move can be very painful.
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If there is only one stock that can use a good catalyst, it is Tesla (TSLA -6.55%). The annual general meeting of investors will be held in early August, during which shareholders will likely vote to approve the increase in the number of shares. That will open the way for stock diversification.
Retail investors are a critical market
Tesla's revenue and profits have grown significantly over the past decade. In 2012, the company sent less than $ 1 billion in sales. Soon to 2021, and Tesla reported $ 53.8 billion in total revenue. Realizing this, investors have rewarded it with a market value that is greater than the companies that produce the seven largest cars combined.
Part of that number is based on the hope that Tesla will maintain its dominance in the fast-growing electric car market, but stocks are also encouraged to follow the commitment of store investors. According to Business Insider, Tesla was the eighth best-selling stock in 2021, with $ 2.74 billion that year. Tesla has always been among the most well-known stocks discussed in the theaters' social media platforms. Therefore, it is in the company's interest to keep its shares accessible to small investors.
Stocks also traded in stocks that were richer than any other car manufacturer in the world. Stock segregation will not change that fact, but it can create the impression of cheap stocks.
Options for investors
A reduction in the stock price paves the way for stocks to be more active in the options market. Optional contracts are bought for 100 sets, so a $ 700 stock can cost a ton of money in one trade. At lower prices, this market is available to regular investors.
Selling integrated call options is one way to generate revenue through options. This is a popular move as we can generate cash in a stock that does not pay dividends right now and will probably not do so soon. Additional investors may use options to make cash or a fence against a sudden collapse.
While the options are advantageous, they are also very risky and should only be used by experienced investors.
Tesla needs a positive spark
Musk has always raised a lot of headlines, and the installation has been bad lately. His high bid to keep Twitter private (TWTR -5.53%) has become a spectacle. The internal operation of the agreement and the debate over the number of “bots,” or fake accounts, on Twitter have become public. There is speculation that Musk is trying to negotiate a lower price or seek excuses to end the deal.
This has led Tesla investors to wonder if Musk's distinct attention will negatively affect the car maker. In the weeks since April 14, when his Twitter purchase agreement was approved, Tesla's stock price dropped.
Standard & Poor's also removed Tesla from its S&P 500 ESG Index when it was redistributed in early May. While it may seem strange that the major manufacturer of electric vehicles will be reduced in that direction, the decision, according to Standard & Poor's, is based on social and administrative and environmental factors. And while that move was by no means a mistake on many investors' radars, Musk felt the need to respond violently via Twitter, making the issue even more important. His use of harsh language may have applauded some of his followers, but it may also have left other investors worried about the lack of technology.
With all this drama surrounding Tesla and its CEO, the August shareholders ’meeting and the possibility that it will be followed by a split split may provide relief to the company and shareholders. The stock needs catalyst to withstand negative pressures. But even if stocks are diverted from operations, investors should be wary of Tesla because of its market size, unstoppable leadership, and inflation.
