Tesla and the importance of diversification

Eddie Sammon Investments

What is happening to Tesla shares?

The Tesla share price (listed on Nasdaq – ticker: TSLA), has been falling, it is currently at about 168 USD per share as of the 4th of April 2024, compared to about 407 USD per share on the 5th of November 2021 (split adjusted price). It is currently one of the worst performing stocks that make up the S&P 500, which is currently on a bull run.


Why has it been falling? 

Analysts point to the following factors:

  • Losing market share to other electric vehicle (EV) manufacturers in China (6.7% compared to 10.5% a year ago)
  • Lack of sales growth in China (up 0.2% since last year, compared to 33% for the Chinese EV market as a whole)
  • Tesla global car deliveries (an approximation for sales) are down by 8.5% since last year, the first fall in four years, more than expected
  • Falling profit margins from car sales due to price cuts
  • Customers possibly turning away from Elon Musk due to his political actions
  • Some investors sense that Elon Musk is too distracted to run Tesla


What should I do with my investments? 

We cannot give investment advice on a website article. Aisa International France can provide you with a financial review and if any investments are to be recommended, we always recommend diversified investment portfolios, which can help you to reduce risk without necessarily reducing expected return.


What other lessons can be learned from this? 

Tesla was known as a “Magnificent Seven” stock, along with Apple, Microsoft, Google parent Alphabet, Amazon, Nvidia and Meta, and you can see why with previously very impressive share price growth, including doubling over a six month period in 2021. However, investors should always be weary of having a too concentrated investment portfolio and of marketing names given to stocks such as “The Magnificient Seven”. This not only highlights the importance of diversification, but also shows how previously high performing assets, such as Bitcoin and even the S&P 500 index, could also fall substantially.


The views expressed in this article are not to be construed as personal advice. Therefore, you should contact a qualified, and ideally, regulated adviser in order to obtain up-to-date personal advice with regard to your own personal circumstances. Consequently, if you do not, then you are acting under your own authority and deemed “execution only”. Additionally, the author does not accept any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Importantly, this article is dated and is based on legislation as of the date. It should be noted that legislation changes, but articles are rarely updated. Sometimes a new article is written; so, please check for later articles. Additionally, check for changes in legislation on official government websites. Finally, this article should not be relied on in isolation.