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A significant factor driving Tesla’s stock decline could be related to margin calls—not necessarily company fundamentals. Many investors borrow funds to purchase Tesla shares, and when the stock price drops sharply, brokers may require the borrowings to be reduced or repaid. This can trigger forced liquidation of holdings, further depressing the stock price in a feedback loop.
This phenomenon is common in highly volatile stocks and can exacerbate downward movements independently of underlying business conditions. It highlights the importance for investors to exercise caution with margin trading and to consider their long-term investment horizon.