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Rout At The Stock Market Sees Tesla Loosing A Third Of Its Value

Rout At The Stock Market Sees Tesla Loosing A Third Of Its Value
The value of the shares of Tesla has dropped by a third of what it was at its record high in January which also marks the third time that there has been a dramatic correction in the price of the stocks of the United States based electric car maker in about a year.
In recent weeks, investors have been selling off high valuation stocks because of concerns among them of rising rates of interest. That has resulted in the company’s market capitalization falling by about $300 billion since the high of $550 billion that it had reached on January 26. The market value of the company is now behind that of the social media company Facebook Inc. Tesla’s value had surpassed that of Facebook in December after the electric car maker had joined the S&P 500 index.
As of at the beginning of this week, the share value of Tesla was down by almost 35 per cent compared to the record high that it achieved on January 26. 
The ARK Innovation ETF, which has 10 per cent of its assets invested in Tesla, fell by 6 per cent.
Since February 12, there has been a drop in the broader technology and other growth stocks. On February 12 the Nadsaq closed at its most recent record high. But compared to the stock value of the other heavyweights of the Wall Street, the fall in the share price of Tesla has been deeper during the same period.
The recent growth in the share value of Tesla was based on the expectations of investors about that the company will be able to expand its production quickly and also make profits. This drop in the share value of Tesla happened after a tweet by its Chief Executive Elon Musk on Saturday the company would likely provide an update on the company’s planned Cybertruck pickup sometime in the second quarter of the current year.
The Cybertruck was unveiled by Musk in 2019.
Since the beginning of 2020, Tesla’s share price has fallen by amounts similar to or greater than the latest fall in its prices twice which makes the company’s stocks the most volatile among Wall Street's largest companies. In February and March last year, the stocks of Tesla fell by more than 60 per cent when the global markets were hit by the Covid-19 pandemic. The stocks reached a new high in August last year but again dropped by 33 per cent and then again recorded a meteoric rise.
Since the peaking of Nasdaq on February 12, Tesla’s market value is now almost 30 per cent down which has resulted in a 43 per cent drop in the gains made by the company in the past six months. In comparison, the shares of Apple Inc have dropped by about 13 per cent while there has been a less than 10 per cent drop in the stocks of Inc, Microsoft Corp and Facebook Inc since February 12 this year.

Christopher J. Mitchell

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