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Tesla Turns Into A Nightmare: Capitalization Lost More Than $230 Billion In 4 Weeks, Stocks Plunged Causing A Series Of Companies To 'Collapse', ETFs' Price Crashes

Tesla shares have fallen sharply in the past four weeks, leading to the decline of a series of companies in the same industry.

Saturday, 6 March 2021

/ by Ella Rose
Tesla shares continued to fall sharply on March 5 and saw a valuation of $ 234 billion in the past four weeks. Tesla fell 13 percent in yesterday's session, then rebounded slightly with a 3.8 percent drop at $ 597.95 - its lowest since Dec. 3. The electric scooter manufacturer's shares have lost 11% of their value just this week, extending the chain of declines for 4 weeks - the longest since May 2019.

The sublimation that helped billionaire Elon Musk's company join the S&P 500 index reversed to the worst decline this year, as other automakers are also investing more heavily in electric vehicles. In recent months, the "giants" in the industry including General Motors, Ford Motor and Volkswagen have made announcements about new electric vehicles and intend to expand in this nascent market.

Tesla's impressively high valuation was also affected by the strong sell-off of many tech stocks this week. Investors flocked to withdraw capital from the sector amid rising Treasury yields, raising concerns that firms trading at high valuations would not meet expectations if borrowing costs. higher.

In this sell-off, Tesla is one of the companies that saw the biggest drop in the Nasdaq 100, as well as the S&P 500. Tesla's current market cap is about $ 574 billion, significantly lower than the 837 billion USD at the end of January.

Meanwhile, electric startups were also sold off like Tesla. The biggest losers include Lordstown Motors Corp., Nio Inc., Workhorse Group Inc., XPeng Inc., and even some SPACs are preparing to merge with electric vehicle makers like Churchill Capital Corp. IV and Northern Genesis Acquisition Corp.

The negative performance of Tesla stock has cost shareholders about $ 300 billion by 2021, but the consequences that the company has suffered from market-wide speculative sentiment is even greater.

Accordingly, the investment funds holding a large amount of Tesla shares suffered heavy losses, most notably the ETF fund of "golden face in the investment village" Cathie Wood - Ark Innovation ETF. At one point yesterday, 1 out of 54 ETFs in the US that managed $1 billion and invested 1% in Tesla lost money.

Although Tesla is "a negative factor", but large funds holding stocks benefiting from the pandemic with a weight equal to Zoom Video Communications are also heavily affected. Nearly all 12 funds that own a significant stake in Zoom were negative yesterday.

The shock that spread across the market from a single stock drop is a testament to how fast things can happen, when investors take risks and flock to a stock that rises sharply.

Mohit Bajaj, director of the ETF division of WallachBeth Capital, said: "Any fund that holds a stock with a large proportion, that stock will be under pressure and vice versa, especially during strong sessions. Buying is weak. We are seeing a number of stocks with 'huge' performance last year facing heavy pressure."

The prices of Invesco Wilderhill Clean Energy, Ark Next Generation Internet, the Ark Innovation and First Trust NASDAQ Clean Edge Green Energy Index Fund ETFs all dropped more than 6% in the middle of yesterday's session, but then the decline narrowed as markets close the door.

James Pillow, chief executive officer of Moors & Cabot Inc., said: "Strong stocks are great when the 'waves' are out there. But when buying pressure falls sharply because of liquidity, the team is. These often decline faster than during the uptrend, holding such towering valuations is a significant risk with portfolio focus and a risk to confidence in the stock market as a whole. "

According to Arthur Hogan, chief market strategist at National Securities Corp., Tesla is a "perfect example" for betting on a dream. "This is when you weigh and say 'this is going to be your greatest investment' and then see the value of that stock go up. But you have to understand that there is no investment," he said. one-way'."

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