With the third sharp drop in 2021 and the largest one-day jump in the past twelve months, Tesla stock has been able to grab attention. Let’s figure out what triggered the decline and growth of this magnitude.
Tesla capitalization decreased by almost $ 300 billion
On March 8, Tesla (NASDAQ: TSLA) stock price dipped 5.84%, from $ 597.95 to $ 563. According to Reuters, this led to a decrease in the capitalization of Elon Musk’s company by almost $ 300 billion. Compared to the January peak of this indicator, we are talking about a loss of 35%. Yes, more than one third!
It should be noted that this was the fifth session in a row, which ended with a drop in quotations. During these days, the shares of the American manufacturer of electric cars fell by 21.63%.
Why are Tesla shares falling?
Experts note that over the past weeks, quotations have been sagging not only in Tesla, but also in many other large representatives of the technology sector.
What is happening is caused by a surge in activity around US government debt securities. Say, the fall in price of ten-year Treasury bonds and the rapid growth of their yield provoked the sale of value shares.
The drop in Tesla shares can also be explained by the fact that investors are tired of expecting the long-promised rapid increase in the production of electric vehicles. And then the head of the company writes on Twitter, they say, the planned Cybertruck update will not be until the second quarter.
Record rise in price per day
To say that on March 9 the situation with the drop in quotations has changed is to say nothing. During the trading session, the price of the automaker’s securities jumped 19.64%, from $ 563 to $ 673.58. The company’s capitalization reached $ 646.54 billion. This is Tesla’s strongest one-day growth since February 3, 2020.
Analysts say the rise in price is due to an increase in sales of electric vehicles of this brand in China. According to the China Passenger Car Association (CPCA), 18,318 electric vehicles were sold last month, up from 15,484 a month earlier.
The Wall Street Journal associates the rise in Tesla shares with a change in the negative trend to positive in the entire technology sector. And Reuters – with the fact that many analysts changed their recommendation to “buy” and raised the target price.
What happened to the tech sector?
On Tuesday, the Nasdaq Composite Index posted the largest gains in the past four months. It rose by 464.66 points (3.69%) and reached 13,073.82 points. Other US stock indices also rose: the Dow Jones Industrial Average added 0.1%, and the S&P 500 – 1.42%.
Such companies as GameStop (NYSE: GME) – by 26.94%, Nvidia (NASDAQ: NVDA) – by 8%, PayPal (NASDAQ: PYPL) – 6.9%, Apple (NASDAQ: AAPL) – by 4.1%, Amazon (NASDAQ: AMZN) – by 3.8%.
Summing up the result
Perhaps Tesla shares can be safely called one of the most volatile shares of tech giants. Over the past week, quotes managed to lose 21.63% and gain 19.64%.
A year ago, when the COVID-19 pandemic knocked global markets down, the automaker’s stock fell by more than 60%. In August, the drawdown was 33%, but in January it peaked at $ 883.09 per share.
Do you think the growth of quotations of the American automaker will continue?
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