Tesla Erases $199 Billion in Worst Two-Day Rout in 14 Months

(Bloomberg) -- Tesla Inc. lost about $199 billion in value during its biggest back-to-back selloff since September 2020 amid a host of negative news.

The drumbeat of adverse headlines reached a crescendo after Elon Musk's Twitter poll that asked voters over the weekend if he should sell 10% of his stake in the electric-vehicle company was followed by news of his brother Kimbal selling some shares just before the poll. There was also a Business Insider report on Michael Burry, the investor made famous by “The Big Short” movie, saying Musk may want to sell stocks to cover his personal debts.

“The stock is extremely overvalued from a long-term perspective, and investors are struggling with the valuation,” said Matt Portillo, an analyst at Tudor Pickering. He noted that Musk's stock-sale poll provided investors “an excuse to pull back a bit.”

The shares tumbled 12% on Tuesday, after closing down 4.8% on Monday.

Despite the latest drop, Tesla is still up 45% this year, and has held above $1 trillion in market value, a key level it hit in late October. Most of those gains came after the company reported strong results and delivery numbers for the third quarter, significantly beating market expectations, and as rental-car company Hertz Global Holdings Inc. placed a big order for Tesla cars for its fleet.

Matthew Maley, chief market strategist at Miller Tabak + Co., said the selloff in Tesla's shares was part of a normal and healthy pullback. He called it a “reaction to a very overbought condition.”

Chipmaker Nvidia Corp.'s latest push into self-driving cars, could have added further pressure on Tesla as the EV maker's edge over competitors in autonomous driving technology is often cited as a big reason behind its premium multiple.

“The Nvidia autonomous vehicle (AV) technology announcement is a factor in today's selloff,” said Seth Goldstein, an analyst at Morningstar. Even though Tesla currently has a lead in AV, if Nvidia's technology works well and “starts appearing in other automakers' vehicles in model year 2024, then Tesla will face increased competition.”

Burry didn't immediately respond to a message from Bloomberg News to confirm the reports on the tweet, which currently doesn't appear on his Twitter feed. Separately, Kimbal Musk disclosed in a filing that he sold 88,500 Tesla shares on Nov. 5.