Part 4/10:
Musk’s explanation of Tesla’s falling stock price highlights macroeconomic factors—particularly rising interest rates—that make bonds more attractive compared to equities. If treasury yields and the risk-free rate increase, stocks become less appealing, leading to a decline in their valuation. For instance, if both treasury bills and stocks offered a 10% return, investors would prefer bonds for safety, suppressing stock prices.
This macro perspective raises the question: Is the decline solely due to economic conditions, or do company-specific issues also play a role? While Musk largely attributes recent stock movements to broader economic forces, some analysts argue that Tesla’s stock has been underperforming beyond macro trends, especially after Musk’s Twitter acquisition.