Tesla Closes Below $500 Billion Market Cap for First Time in Two Years

Tesla Closes Below $500 Billion Market Cap for First Time in Two Years

(Bloomberg) — The relentless decline in the shares of Tesla Inc. has pushed the electric-vehicle maker’s valuation to close below the half-trillion dollar mark for the first time since November 2020.

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The stock closed down 2.6% at $156.80 in New York on Wednesday, taking its market capitalization to $495 billion, and bringing its decline this year to 55%. The slump is painful for a broad swath of investors: The company is the sixth-biggest member of the S&P 500 Index as of Wednesday’s close. It’s been the third-largest drag this year on the benchmark, which Tesla joined two years ago next week.

Tesla shares have been battered by angst over a potential recession and the Federal Reserve’s move to hike interest rates, which have prompted investors to dump risky and expensive stocks, sparking an intense selloff in technology and growth assets in particular.

On top of that, the company’s own troubles, including supply shortages, soaring raw material costs and production disruptions, as well as Elon Musk’s preoccupation with turning around newly acquired Twitter Inc., have all weighed heavily on the stock. Musk has been dethroned as the world’s richest person because of the slide.

Meanwhile, the outlook for next year is darkening as well. On Wednesday, at least two Wall Street analysts struck a cautious note on Tesla and the electric-vehicle sector overall. Goldman Sachs Group Inc. lowered estimates to reflect “softer” supply and demand, while Morgan Stanley warned that the brakes were “screeching on electric vehicle demand,” and cut its projections for adoption in the US.

While Tesla shares have largely been sliding the whole year, the drop has intensified in the past couple months, with the stock falling 41% since the end of September. The broader S&P 500 Index has advanced 11% in the same period, while the technology-heavy Nasdaq 100 gained 7%.

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