Shares fell as much as 12 percent on Tuesday, after closing 4.8 percent on Monday after a string of bad news.
Tesla Inc. lost nearly $ 175 billion of its valuation, heading for the biggest two-day decline in 14 months, as the stock market gains momentum amid a myriad of negative news.
The drumming of negative headlines reached a crescendo after Elon Musk’s Twitter poll that asked voters over the weekend whether he should sell 10% of his stake in the electric vehicle company was followed by news of his brother Kimbal holding a few shares sold just before the poll. There was also a Business Insider report on Michael Burry, the investor made famous by the “The Big Short” movie, which says Musk might want to sell shares to cover his personal debt.
“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 share sale auction offered investors “an excuse to pull back a bit.”
The stock fell as much as 12% on Tuesday, after closing at 4.8% on Monday.
Despite the recent decline, Tesla is still 46% higher this year, holding more than $ 1 trillion in market value, a key level it reached at the end of October. Most of these gains came after the company reported strong results and delivery figures for the third quarter, which significantly exceeded market expectations, and since the rental car company Hertz Global Holdings Inc. placed a large order for Tesla cars for its fleet.
Matthew Maley, chief market strategist at Miller Tobacco + Co., said the sale of Tesla’s shares was part of a normal and healthy withdrawal. He calls it a “reaction to a very overbought condition.”
Chipmaker Nvidia Corp. ‘s latest push in self-driving cars, could have added further pressure on Tesla, as the EV manufacturer’s lead over competitors in autonomous driving technology is often cited as a major reason for its premium multiple.
“The Nvidia Autonomous Vehicle (AV) technology announcement is a factor in today’s sales,” said Seth Goldstein, an analyst at Morningstar. Even if Tesla currently has an edge in AV, if Nvidia’s technology works well and “starts appearing in other carmakers’ vehicles in the 2024 model year, Tesla will face greater competition.”
Burry did not immediately respond to a message from Bloomberg News confirming reports of the tweet, which does not currently appear on his Twitter feed. Separately, Kimbal Musk revealed in a filing that he sold 88,500 Tesla shares on November 5th.