Tesla Share Price Drop Wipes Out $100 Billion of Market Value in One Day

The recent drop in Tesla’s stock price wiped out around $109 billion of the companies valuation in a single day. According to one analyst, “Tesla is clearly running out of momentum, and the lack of a launch of a low-budget car in the mid-$20,000 range really dampens the growth outlook as the competition tries to catch up.”

Bloomberg Quint reports that Elon Musk’s Tesla suffered a sharp drop in stock price on Thursday, wiping $109 billion off the company’s valuation in a single day. The sharp drop in stock price came after the company released its fourth-quarter earnings and its future outlook failed to impress investors.

Elon Musk and Cybertruck (Ringo H.W. Chiu/AP)

Tesla stock price dropped by almost 12 percent on Thursday following an earnings call on Wednesday. The stock closed at $829 in New York, the lowest it’s been since October 14. The stock price drop represented the second biggest on the S&P 500 Index.

Tesla CEO Elon Musk said during Wednesday’s earnings call that the company would not be bringing a new vehicle to market this year, a major letdown for those who predicted that Musk’s talk of an “updated product road map” would include news about the company’s Cybertruck SUV.

Edward Moya, a senior market analyst at Oanda Corp., commented: “Tesla is clearly running out of momentum, and the lack of a launch of a low-budget car in the mid-$20,000 range really dampens the growth outlook as the competition tries to catch up.”

(FREDERIC J. BROWN/Getty)

The idea of a more affordable $25,000 Tesla Model 3 was discussed during the earnings call but quickly dismissed as not being worked on at the moment, with a larger emphasis placed on artificial intelligence.

Barclays analyst Brian Johnson told investors in a note: “In talking product pipeline, Musk pivoted from future vehicles (like the Roadster or <$25k Model 2) to robotaxis and humanoid robots. While we recognize that robotaxis are a crucial part of the bulls’ ‘blue sky’ valuations for Tesla, we are concerned about the lack of a physical product pipeline.”

During the call, Tesla’s Chief Financial Officer Zachary Kirkhorn warned that higher input costs could impact Tesla’s market-leading margins. “We are also seeing inflation and rising commodity prices which we expect to continue to put pressure on our costs. How this specifically impacts gross margins is uncertain,” Kirkhorn said.

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