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Tesla (TSLA) wipes out $50 billion in value in massive intraday swing — how?

Tesla (TSLA) has wiped out $50 billion in value in a massive intraday swing that saw the stock up 14% and down 3%. What happened?

Tesla (TLSA) record valuation

The automaker’s stock is the talk of Wall Street as it is literally becoming one of the most valuable companies in the US.

Earlier today, we reported on how Tesla’s value surged to over $300 billion and became more valuable than Volkswagen, Honda, and Toyota combined.

This morning, Tesla surged 15%, but the stock took a downturn in the afternoon:

It went from being up more than 15% at $1,791 to closing down 3% at $1,497.

That’s a massive reduction of more than $50 billion in valuation compared to the new all-time high achieved today.

To put it in perspective, Tesla erased the equivalent of Honda’s entire valuation in stock value in just a few hours.

What Happened to TSLA?

The entire market took a downturn in the afternoon, but you could argue that Tesla’s drop was leading the pack.

The downturn can be partly explained by the California state government announcing that they are taking a step back in opening the state. They are now ordering several types of businesses, including indoor dining at restaurants, to close in all counties.

It comes after the state, along with several other regions reopening after strict restrictions, is seeing a surge in new COVID-19 cases.

Tesla has a lot of operations in California, and it has had conflict with local officials over keeping its Fremont factory open amid the pandemic.

It’s possible that the market is afraid that Tesla might run into more issues in California with new restrictions being put in place.

Electrek’s Take

This is pretty insane. A $50 billion intraday swing in valuation is not something you see every day.

Personally, I doubt that the state or county is going to force Tesla to close Fremont again, but I think Tesla is planning its own factory shutdown soon for upgrades anyway.

I am still long Tesla, but I’ve been going more liquid on my investments lately because the market looks like a bubble to me right now, and we are not out of the woods yet with the pandemic.

How are you approaching your Tesla investment right now? Let us know in the comment section below.

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