Tesla share price drop is not that unusual

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As we come to the end of the year, there's a bit of drama unfolding on Elon Musk's private social media playground A.K.A Twitter. He has dominated the conversation on Twitter for so long and on so many topics, but this time it is about the free falling Tesla ($TSLA #TSLA) share price.

There is a lot of schadenfreude from his critics and to be fair, he brought the opprobrium upon himself.



There are so many reasons being bandied about, attempting to explain why the price is free falling. It ranges from Musk's toxic attitudes and ideas, destruction of the Tesla brand, the Deep State manipulating the price (no, not a joke).

One explanation that I don't see too often is that the market is just... real bad. For the tech stocks, 2022 is a horrible year so far. Taking a look at a random grab bag of tech stocks, Tesla is not the worst.


Tesla's share price drop doesn't seem very unusual from the table above and we can speculate that it is probably due to Elon Musk's actions but that could also be one of a list of reasons.

Now this is obviously not a in-depth analysis and is not financial advice but there's a few things we can learn from this.

1) Tesla investors can take some small comfort that they are not alone in this. 

2) More importantly, this speaks to the necessity of diversification in your portfolio. 

3) A bag of stocks in the same industry is diversification.

If you take a random bag of "old" economy stocks, you can see that diversification would have helped with the losses. 




The last 2 companies in this list are not random, but it suggests that the Tesla share price drop may be due to a combination of market and idiosyncratic factors.

None of the above should be construed as investment advice. Do your own due diligence as I will not be responsible for any loss/risk.


 

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