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Wednesday, September 09, 2020
Tesla stock price collapses, $ 80 billion market value is destroyed in a few hours. How could this happen?
It’s called a slump: Tesla’s stock price plunged more than 20 percent yesterday. The market value of the electric car pioneer fell by a whopping $ 80 billion, that’s more than the market capitalization of Ford and General Motors (GM) combined. What is happening there?
Last week, the stock had hit a record high of around $ 502, but now it was rapidly going downhill. The trigger after the rapid rally is that, surprisingly, Tesla will not be included in the notorious S&P 500 index on September 21. Many funds replicate the composition of this leading index and would have had to stock up on stocks for a short time if Tesla had been admitted, which would have resulted in higher prices.
Nikola’s course goes through the roof
The non-inclusion was the reason why investors who had bet on a price increase sold their shares. Additionally, some funds may have been positioned early. They are also dissolving their Tesla positions. The reason for the rejected entry also ensured falling prices: The index provider gave preference to companies that are worth significantly less on the stock market than Tesla, but that generate more quarterly earnings. Additionally, he spoke out against Tesla that the stock is extremely volatile.
Another reason for the collapse: Many investors have likely jumped at the opportunity to exit after last week’s strong price gains. There’s also the news that GM is getting involved in Tesla’s competitor, Nikola. The electric truck specialist’s “Badger” model is supposed to compete with Tesla’s “Cybertruck.” GM will build the truck. As a result, Nikola shares sometimes soared more than 50 percent, while GM shares jumped a good ten percent.
Tesla is likely to continue declining today. The shares are 1.8 percent in the red before the US IPO.
