The shares of Tesla Inc. fell on Monday for a fifth consecutive session, part of a sell-off that hit more than a quarter of a trillion dollars of the company’s market cap in just over a month.
Tesla stock TSLA,
is down 21% in the past five trading days and down 34% in the last month. Since Tesla peaked on January 26 with a market cap of about $ 850 billion, Tesla has lost about $ 277 billion in valuation.
Tesla has also entered its third bear market – defined as a drop of 20% or more from a recent high – in the past year, following a steep sell-off in September and March 2020. Still, the electric car manufacturer’s volatile shares are more then increased. 360% over the past 12 months.
Tech stocks in general have been hit hard in recent weeks, with the Nasdaq Composite COMP,
Decreased 9% in the past month. Electric vehicle companies in particular have fallen hard. Among Tesla’s rivals, Nio Inc. NIO,
is down 38% in the past month, while Nikola Corp. NKLA,
is down 38%, and Li Auto Inc. LI,
is a 30% discount.
One reason is a worldwide shortage of chips, which is affecting car manufacturers’ supply lines. In February, Tesla briefly closed its Fremont, California plant, blaming CEO Elon Musk for a “parts shortage.” CNet reported on Monday that customers purchasing Model 3 and Model Y vehicles are facing a months backlog in delivery.
Rising interest rates have also taken their toll as fast-growing companies like Tesla depend on future cash, which is devalued as interest rates rise. One estimate by Barron’s found that, as an admittedly simplified example, every 1% interest rate hike hurts Tesla’s value by about $ 200 billion.
See: Tesla crater. This is how much interest rates hurt
Tesla shares closed at around $ 568 a share on Monday, below the average target price of $ 616 by analysts followed by FactSet.
ARK Investment founder Cathie Wood has said her company will soon issue a new target price for Tesla shares, but she said on Monday that she is still optimistic about the company.
“Our confidence in Tesla has grown for a number of reasons,” Wood said in an interview on CNBC’s “Closing Bell,” citing Tesla’s market share and advances in autonomous driving.