On Monday, the shares of Apple (NASDAQ:AAPL) and Tesla (NASDAQ:TSLA) fell sharply. At 12:30 PM ET, Apple stock was down by over 2.6%, while Tesla was trading with about 5% losses for the day. TSLA is trading with about 5% gains on a year-to-date basis, but AAPL has lost 5.2%. This could be the start of another negative week after both of them ended a previous couple of weeks in the negative territory.
Why their stocks fell today
Today’s big losses in Apple and Tesla stocks were primarily driven by a market-wide sell-off — especially in the tech stocks. This morning the S&P500 — the key U.S. market index — slipped by 0.7% after settling with a 0.7% loss in the previous week. Concerns about surging treasury yields in the country could be one of the reasons for investors’ worries.
Earlier this month, Tesla revealed is huge US$1.5 billion investment in Bitcoin. Bitcoin has seen a massive rally this year. It posted its all-time high — near US$58,354 — yesterday. However, the cryptocurrency saw a massive sell-off this morning and fell as much as 19% from its record high. The Elon Musk-led company’s big Bitcoin bets could be another reason for today’s sharp losses in Tesla stock.
Apple’s automotive ambitions
Many experts have been calling tech stocks like Apple overvalued for many quarters. Warrant Buffett’s investment firm Berkshire Hathaway last week revealed that it continued to cut its Apple investments for the second quarter in a row.
Apple has secretly been working on its car project for many years. In the first week of February, a CNBC report cited sources to claim that Apple could soon finalize a deal with the South Korean automaker Hyundai–Kia in its efforts to produce Apple-branded electric and autonomous cars. But Hyundai later denied the reports of its talks with Apple.
Nonetheless, Apple’s ambitions to enter the automotive segment are well known. The company also has hired many auto industry experts and engineers in the last few years. The American tech giant is eyeing to gain from the fast-growing electric and autonomous vehicle demand — that’s behind the recent success of EV companies like Tesla.
Buy this TSX EV technology stock
Last year, Apple rose by 81%, and Tesla stock rallied by 743% — taking them to the overbought territory. That’s why their stocks might not be a value buy right now if you want to gain from surging EV and autonomous car demand. But the good news is, the shares of some smaller companies that are developing the technology for electric and autonomous vehicles still look cheap. BlackBerry (TSX:BB)(NYSE:BB) is one such great Canadian stock that you can buy right now. After ending the year 2020 on a mixed note, its stock has risen by about 64% this year.
The company has been actively investing in developing better technology for electric vehicles, connected cars, and smart mobility. In January, BlackBerry expanded its partnership with Baidu. This partnership would allow BB’s QNX Neutrino real-time operating system to be used in the upcoming mass-produced electric cars in China. The company is also developing an integrated vehicle data platform to help automakers access vehicle sensor data in real time and utilize it to provide better functionality.
The stocks like Tesla and Apple have seen massive gains in the last couple of years. Their stocks have higher chances of falling sharply if the market correction continues in 2021. That’s why I would prefer to buy other cheap EV technology stocks like BlackBerry. It would not only reduce my risks but also likely give me better returns on my investments.
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
The Motley Fool owns shares of and recommends Apple, Baidu, Berkshire Hathaway (B shares), and Tesla. The Motley Fool recommends BlackBerry and BlackBerry and recommends the following options: short January 2023 $200 puts on Berkshire Hathaway (B shares), short March 2021 $225 calls on Berkshire Hathaway (B shares), and long January 2023 $200 calls on Berkshire Hathaway (B shares). Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.