Tesla’s ‘Brutal Selloff’ Worsens, Market Value Losses Hit $300 Billion As Investors Move Away From Big Tech


Shares of electric carmaker Tesla–last year’s best-performing S&P 500 stock—plunged to their lowest level in three months Monday as the broader market rallied—yet another sign the recently booming market for tech stocks could be over, once postpandemic spending drives growth into other industries.


While the Dow Jones industrial average rallied by more than 400 points Monday afternoon, Tesla stock fell as much as 6%, as momentum from the Saturday passage of President Joe Biden’s $1.9 trillion stimulus plan helped drive investors back into blue chips in cyclical industries (like General Electric, up 4%) and away from big tech firms.

Tesla shares are down 20% in the past week alone, after plunging 8% Thursday when billionaire money manager Ron Baron—a longtime Tesla bull who’s declared the stock could swell thirtyfold in his lifetime—told CNBC he made the “painful” decision to sell 1.8 million shares for “risk management.”

Though Baron reiterated that prices could rocket toward $2,000 over the next decade, he said the move helped reduce risk in his portfolios after Tesla’s nearly 20x increase since he started buying shares in 2014, echoing concerns among other experts over the stock’s heightened volatility. 

The Tesla selloff steepened after Federal Reserve Chair Jerome Powell said Thursday that inflation will rise as the economy recovers, a development that sent Treasury yields surging–and stocks tumbling. 

“Higher yields tend to hit highfliers harder,” Ally Invest Chief Investment Strategist Lindsey Bell said in a Thursday note, adding: “That’s why we’ve seen stocks like Tesla and Peloton fall more than 30% this year.”

Concerns over rising rates have also hit high-flying ETF provider Ark Invest, which has soared in popularity amid tech’s dominance for its investments in “disruptive innovation” but is now facing double-digit percentage losses and growing investor outflows.


“It’s been a brutal selloff for the electric-vehicle sector over the past month, which, along with tech stocks, have sold off markedly after a historic rally over the past year,” Wedbush analyst Dan Ives said in a note Monday. “The poster child for electric vehicle weakness the last few weeks has been Tesla,” he adds, attributing the firm’s “painful risk-off moment” to valuation concerns specific to electric vehicle companies (rival Nikola is down 9% this year), competition heating up in the industry, chip shortages and dwindling demand for the vehicles in China.


Tesla, which carries about 1.5% of the S&P 500’s weight, is the worst-performing top ten stock in the index on Monday. Other big underperformers include Apple and Alphabet—both down about 3%. Though it’s still up 365% over the past year, Tesla has plunged 35% since its high on January 26; over the same period, the S&P is virtually flat.


$308 billion. That’s how much market value Tesla has lost since January 26, when the firm was worth about $848 billion. CEO and chairman Elon Musk is worth about $145 billion, according to Forbes. 


In February, value stocks outperformed growth stocks like Tesla by the widest margin since the dot-com bubble burst in 2000, Bank of America said in a note to clients last Tuesday. Underperformance among growth stocks was led by the five biggest ones–Apple, Microsoft, Amazon, Facebook and Tesla–which fell an average of 5% last month.


Markets have gotten a taste of yield-induced panic in recent weeks, with the Dow Jones industrial average plunging as much as 1,000 points in late February as yields hit a one-year high. Fed Governor Lael Brainard earlier this month became one of the first U.S. central bankers to express concerns over rising yields, saying at a conference that the recent boom “caught [her] eye.” It’s likely the Fed will be pressured to raise historically low interest rates in order to contain yields if they continue to grow, but experts have warned that any such hawkishness could tank stocks. “The difficulty today is that we have the most interest-rate-sensitive stock market in Wall Street history,” Jim Stack, the president of Whitefish, Montana’s InvesTech Research told Forbes in February.


Tesla Has Plunged 25% And Lost $200 Billion In Market Value Since Its Bitcoin Investment (Forbes)

Dow Plunges Nearly 700 Points After Powell’s Speech Fails To Ease Investor Worries (Forbes)

‘Not At All Likely’ U.S. Will Reach Maximum Employment This Year: Fed Chair Powell (Forbes)