Tesla lost about $199 billion in value during its biggest back-to-back selloff since September 2020 amid a host of negative news.
The drumbeat of adverse headlines reached a crescendo after Elon Musk’s Twitter poll that asked voters over the weekend if he should sell 10 per cent of his stake in the electric-vehicle company was followed by news of his brother Kimbal selling some shares just before the poll.
There was also a Business Insider report on Michael Burry, the investor made famous by “The Big Short” movie, saying Musk may want to sell stocks to cover his personal debts.
Musk has lost $50 billion so far this week. It’s the biggest two-day decline in the history of the Bloomberg Billionaires Index, and the biggest one-day fall after Jeff Bezos’s $36 billion plunge following his divorce from MacKenzie Scott in 2019.
The drop narrows Musk’s lead over Bezos as the world’s richest person to $83 billion.
Musk surpassed the Amazon.com founder for the title for the first time in January and the gulf between the two recently rifted as wide as $143 billion, a figure greater than the net worth of Bill Gates, the world’s fourth-richest person.
“The stock is extremely overvalued from a long-term perspective, and investors are struggling with the valuation,” said Matt Portillo, an analyst at Tudor Pickering. He noted that Musk’s stock-sale poll provided investors “an excuse to pull back a bit.”
The shares tumbled 12 per cent on Tuesday, after closing down 4.8 per cent on Monday.
Despite the latest drop, Tesla is still up 45 per cent this year.
Most of those gains came after the company reported strong results and delivery numbers for the third quarter, significantly beating market expectations, and as rental-car company Hertz Global Holdings Inc placed a big order for Tesla cars for its fleet.
Despite the slump, Musk’s fortune is still up 70 per cent this year thanks to Tesla’s gains on the back of strong earnings growth and delivery numbers and a higher valuation for SpaceX.
Chipmaker Nvidia Corp’s latest push into self-driving cars, could have added further pressure on Tesla as the EV maker’s edge over competitors in autonomous driving technology is often cited as a big reason behind its premium multiple.