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Tesla Inc. (TSLA)’s Leading Position at Risk?

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What is Tesla?

Tesla is an American electric automobile and green energy firm, functioning privately, with Elon Musk as its Chief Executive Officer, Zachary Kikhorn as its Chief Financial Officer and Robyn Denholm as the company’s Chairman. The company’s major products include solar panels, solar roof tiles, battery energy storage, and electric cars, for which it is famously known for.

Investors Interested in Safer Options

In February 2021, CNBC reported Tesla’s biggest drop in stock prices since September 2020, when it closed down 8.55%. Ever since 2021 began, Tesla has been having a hard time. As of April 12, TSLA  stock share is at $677.02 which is more than 23% lower than the stock’s peak price. It seems that is the stockholders continue to sell their stocks and opt for safer choices, Tesla could drop even further.

Emerging Competition

Another reason for the stock prices going down is the rise of potential competitors. At the moment, Tesla enjoys the privilege of being the number one electric car manufacturer, but with time, more and more players are entering the arena. In September 2020, Tesla had 18% of the global market share in electric cars, followed by Volkswagen at 6%. Chinese companies are now emerging as key actors. For example, firms like NIO and XPeng are being replaced by Tesla in China, which is the biggest market for electric cars. Similarly, other companies like BYD, and Ford are threatening Tesla’s position as the market leader, hence affecting its stock prices negatively.

Is it wise to invest in Tesla?

The question remains: should one invest in Tesla right now? Even though the company is going through a rough patch, it is still leading the electric vehicles industry. Elon Musk, the company’s CEO is known for his innovative ideas. Tesla is also working closely with Apple in order to complete and implement a clean and green battery storage projects. If we look in the long run, these projects will give an upper hand to Tesla. However, it must be noted that Tesla has already used these positives and valued their stocks at a sky-high price. This means that the company is left behind with very less wiggle room and it cannot afford to take any wrong decisions at this point. Having said this, the higher the risk there is, higher will be the profit you generate!

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