Shares of Tesla experienced the biggest fall on Monday. The stock closed the trading day down about 8.55%, as investors betting on a pandemic comeback rotated out of Big Tech and piled into cyclical stocks. It’s Tesla’s biggest drop since Sept. 23, 2020, when it closed down 10.34%.
The automaker’s stock decline was likely primarily due to a pullback in the overall market on Monday. Many growth stocks like Tesla were hit particularly hard.
Shares of the company’s Big Tech peers also dropped Monday, with Apple, Amazon and Microsoft each closing down more than 2%. Overall, the Nasdaq Composite fell 2.5% on Monday, while the Dow Jones Industrial Average reversed a 200-point loss to close up 0.1%.
Tesla’s stock could also have been dragged down from Bitcoin, which slowed its rally on Monday. The coin was down about 6% after the bell Monday, according to CoinDesk.
Earlier this month, Tesla disclosed it bought $1.5 billion worth of Bitcoin for “more flexibility to further diversify and maximize returns on our cash.” The company also said it plans to start accepting payment in Bitcoin.
The company is “on a trajectory to make more from its Bitcoin investments than profits from selling its EV (electric vehicle) cars in all of 2020,” Wedbush Securities analyst Daniel Ives said in a research note over the weekend.
Expectations And Predictions By Our Experts:
Volatility should be expected from Tesla stock. It soared 743% last year as it won over Wall Street’s attention. Tesla’s sales jumped, and the company demonstrated strong profits. Also likely helping the stock price last year was a big year for growth stocks in general. Many such stocks soared 50% or more in 2020.
But growth stocks were taking a breather on Monday as the Nasdaq Composite fell 2.5%.
Most of Tesla’s gains this year have evaporated. Shares are now up just 1.5% in 2021.
Tesla’s underlying business will likely continue to grow rapidly this year. Indeed, management guided for vehicle deliveries to increase from about 500,000 in 2020 to more than 750,000 this year.
But with a very optimistic business view already priced into Tesla shares, it’s difficult to predict where the stock could end up at the end of 2021.
There’s one thing we can expect with near certainty: plenty more volatility.