By Wallace Witkowski
Tesla shares fall below $125 for the first time in more than two years as market capitalization slides below $400 billion, making the automaker worth less than Visa and putting it at risk of fall into the top 10 most valuable companies in the S&P 500.
Tesla Inc. shares plunged into a fifth consecutive daily decline on Thursday, further adding to returns from short sellers after betting against the electric vehicle maker.
Shares of Tesla (TSLA) ended down 8.9% at $125.35 after falling as much as 11% on volume of more than 200 million shares on Tuesday, against a 52-week average daily volume of approximately 81 million shares. Tesla was the most active and worst performing stock on the S&P 500 index on Thursday, and the most active and worst performing stock on the Nasdaq-100, according to Dow Jones data.
While shares did not close below the $125 psychological barrier, Tesla still ended at its lowest price since September 2020. For the week, shares are down 16.6%, which would challenge the previous week for the worst since 2020. Tesla stock is on the road to its worst month, quarter and year on record.
The decline pushed Tesla’s market capitalization below $400 billion, dropping it to 10th place on the S&P 500’s list of most valuable companies. Visa Inc. (V) passed Tesla on Tuesday, when trading in Tesla pegged its valuation at $395.82 billion, below Visa’s $418.17 billion. Walmart Inc. (WMT), at $383.35 billion, was sneaking up on Tesla with a chance to knock it out of the top 10.
Read: The fall in Tesla shares was bad. But this company has further wiped out investors’ wealth in 2022
Short sellers, whom Tesla chief executive Elon Musk has made it a point to target before, have a happy holiday if they bet against Tesla this year, S3’s managing director of predictive analytics says Partners, Ihor Dusaniwsky, in a note. He pointed out that Tesla was the most profitable stock to sell in 2022.
“Short-sellers backed their short exposure to TSLA for a reason, it’s the most profitable short sale, by dollar value, of 2022,” Dusaniwsky said. Tesla shorts are up $15 billion year-to-date in mark-to-market earnings in 2022, with a gain of $4.54 billion in December alone, according to S3 data.
“Since Elon Musk’s Twitter offer on 4/14/22, TSLA shorts have increased by $13.74 billion in earnings at market price,” Dusaniwsky said.
The analyst said short interest in Tesla has been declining since April due to lower prices, but short selling has increased since August. At 3.05% of the 81.8 million shares sold short, Tesla shares at $11.28 billion are the second largest dollar short sale behind Apple Inc. (AAPL) and its $16.78 billions of dollars in short-term interest.
Read from Monday: Tesla analysts say they can no longer ignore Elon Musk’s Twitter ‘nightmare’
For their part, Visa shares are also the fourth-largest short position by dollar value at $7.75 billion, according to S3 data.
Tesla shares were under pressure on Thursday after the company doubled the discount it offers customers who “take delivery of a new Model 3 or Model Y between December 21-31, 2022 for a $7,500 credit and 10,000 free boost miles,” according to his Reuters, raising fears that demand for electric vehicles could decline. Tesla buyers are no longer eligible for a U.S. tax credit of up to $7,500 for electric vehicle buyers, but that incentive could return in 2023, which could deter buying a Tesla in the U.S. this year .
Tesla shares are down 64.4% for the year, while the S&P 500 fell 19.8% and the Nasdaq Composite Index is down a third.
-Wallace Witkowski
(END) Dow Jones Newswire
24-12-22 0847ET
Copyright (c) 2022 Dow Jones & Company, Inc.
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