Tesla shares plunge by a third on Musk’s tweets and chip shortages

The cost of the electric car manufacturer Tesla plunged by a third following an unsuccessful trading session. This is the third major drop in Elon Musk’s shares in a year.

Tesla’s market capitalization lost nearly $ 300 billion and dropped to $ 550 billion in the March 8 trading session. For the day, the drop was 21%. Tesla’s shares peaked on January 26, when the entire company was valued at $ 850 billion. From the maximum, the overall decline was 35%.

One of the reasons for the fall was the global shortage of microcircuits, which are actively used in electric vehicles’ production. The shutdown of production and logistics difficulties due to the coronavirus pandemic has impacted the semiconductor market.

Thus, car manufacturers are experiencing a shortage of components and smartphones, video cards, and other electronic devices with chips.

As a result, Tesla has suspended its most popular model, the Model 3 electric car, assembled at its California plant. On Saturday, Musk tweeted that updates on the upcoming Cybertruck electric pickup will only appear in the second quarter of 2021. Investors reacted to this with a massive sell-off in Tesla shares, which have risen in price over the past year due to expectations of an acceleration in car production.

Nevertheless, the company is still in a better position than a year ago. Over the past 12 months, the auto giant’s share price has skyrocketed more than 4.6 times, at some point, making Tesla founder Elon Musk the richest man in the world. He lost this status on February 23, when his fortune fell by $ 15 billion per day. The reason for this could be his comment on the price of bitcoin, in which Tesla invested $ 1.5 billion two weeks earlier. The billionaire expressed the opinion that the cost of the first cryptocurrency is greatly overestimated.

Many tech stocks have plummeted since February 12, when the Nasdaq index hit a record high. Tesla’s failure was the most visible, however. Earlier, the automaker’s stock fell more than 60% in February and March last year, when the coronavirus pandemic hit global markets. Then in August, after climbing to new highs, the correction pulled Tesla’s value back by 33%, after which its quotes began to rise again.

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Author: Oleg Ceban
Graduated from University of Oxford. Previously, he worked in various diferent news media. Currently, it is a columnist of the world news section in the Free News editors.
Function: Editor
Oleg Ceban

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