(ATF) Shares of Tesla fell more than 4% on Tuesday as its first-quarter earnings results failed to alleviate investor concerns, while the electric vehicle (EV) company's bitcoin selloff sent the cryptocurrency sinking.
The automaker's quarterly revenue made it barely past estimates, relying mostly on sales of environmental credits sold to other companies and the liquidation of 10% of its $1.5 billion bitcoin investment.
A prolonged global chip shortage and rising competition is also affecting the company.
Shares of the automaker closed down 4.5% at $704.74, down more than 20% from its intra-day high reached in January. They had surged more than 700% last year, making Tesla the world's most valuable automaker.
“Tesla's performance was OK but it wasn't a Elon Musk slam dunk...I don’t think people are into Tesla because of bitcoin," said Eric Schiffer, chief executive of Patriarch Organization, a private equity firm with an underweight stance on Tesla.
"Investors are rejecting the stock short-term," he said, saying Tesla's performance has fallen short of catching up its "astronomical valuation."
Shortly after Tesla reported results, bitcoin tumbled from around $54,000 to $52,700 after cryptocurrency traders found out Musk’s company sold some of its crypto assets and made $101 million.
"Musk was a big cheerleader for bitcoin after disclosing Tesla’s $1.5 billion purchase, so some of his loyal following were initially upset that he quickly cashed out," Edward Moya, Senior Americas market analyst at currency brokerage OANDA, said.
Bitcoin quickly found solid footing after Tesla chief financial officer Zachary Kirkhorn noted that Tesla’s bitcoin investment was a play to preserve cash. He said that bitcoin provided a way for them to store cash while preserving liquidity.
Tesla posted record deliveries in the first quarter despite a global chip shortage that has slammed auto sector rivals. But analysts said a prolonged shortage of chips and batteries could threaten to dampen its growth prospect.
"A global shortage of computer chips is expected to limit production from all manufacturers in the immediate future, and Tesla won't be exempt," Nicholas Hyett, an equity analyst at Hargreaves Lansdown, said.
Regarding supply chain instability, Kirkhorn said: "We believe that this landscape is improving, but it does remain difficult, and it's an evolving situation."
With reporting by Reuters