Tesla stock’s rout is accelerating as the lure and signals of China returning to the limits of Covid Zero add to a litany of investor concerns, with Chief Executive Elon Musk focused on the Twitter Inc. rollover.
Shares of the EV maker fell 6.5% to $168.52 in New York on Monday, on track to close at its lowest level since November 2020. Traders’ anxiety heightened after a city near Beijing rallied to blockades, putting both production and sales at risk. Tesla has also initiated a recall of more than 300,000 cars due to defective taillights.
Shares of Tesla have lost nearly half of their value in less than two months as supply chain woes mount, raw material costs soar, and potential buyers feel the squeeze from stubborn inflation and rising interest rates.
Additionally, Musk has been worried by his newly acquired social media platform, leaving some investors to worry that Tesla’s strategy could fall by the wayside.
“Weakening macro data in China is leading to concerns about Tesla, which has already lowered its price once to stimulate demand and has strong export production in the first half of the fourth quarter,” wrote the Cowen analyst. Jeffrey Osborne in a Friday note.
The analyst added that hedge funds appear to be shifting to a negative bias on the stock due to the risk that there has been “a loss of focus” on Tesla since Musk acquired Twitter.
The recent drop in the company’s stock marks a major retracement of several milestones achieved during its meteoric rise in 2020 and 2021.
Tesla was supplanted as the fifth most valuable company in the S&P 500 by old-economy stalwart Berkshire Hathaway Inc. earlier this month.
The automaker, which lost its trillion-dollar valuation status in late April, only needs its shares to fall another 6.5% from current levels for the valuation to fall below $500 billion. .