Tesla, an American vehicle and technology company, suffered a huge loss as it fell 21% in morning trades. This is the worst trading day for Tesla since the company went public in 2010. This sharp drop may be surprising for many traders, as Tesla recently celebrated a 52-week high.
Tesla became a popular stock with many traders as it gained a lot of value after Tesla split its shares 5-1. Unfortunately, this high was short-lived.
The post-split 52-week high of Tesla peaked at $502.49, and the current value of Tesla stock as of early September was $345.75, indicating that the value of Tesla stock has dropped by 30% compared to their recent 52-week high.
Tesla failed to make it onto Standard & Poor’s 500 indexes.
Securing a place on the index would have provided a real boost for the company, as it would have forced portfolio managers who match the index to buy shares in Tesla.
In fact, experts predict the rise in Tesla shares in the weeks previous was in anticipation of Tesla being added to the index.
While this may be a significant blow for Tesla, it is unlikely this is an indication that the company is in any serious financial trouble.
In 2012, Tesla stocks dropped by 19%, just two years after Tesla went public. In March 2016, the stock dropped sharply again by 19% and again in February 2020. Despite these falls, time and time again Tesla has been able to build itself back up.
It is not just Tesla that has been suffering significant blows in the market. The Nasdaq Composite, for example, is 15% off its recent all-time high, and the Bessemer cloud index of public SaaS companies is 1.8% lower than recent highs.
Tesla is also in a good position to regain value, as it announced earlier this week that over $5 billion worth of shares were sold before the sharp drop in value on 8th September.
It is unknown, however, how long it will take Tesla to match or beat its 52-week high once again.