February 23, 2021 6:15 PM, EST

Tesla Stock Wipes Out Gains for the Year

Tesla Inc. electric vehicles at the automaker's showroom in Shanghai, China. (Qilai Shen/Bloomberg News)Tesla Inc. electric vehicles at the automaker's showroom in Shanghai, China. (Qilai Shen/Bloomberg News)

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Tesla Inc. shares wiped out their year-to-date gains Feb. 23 and briefly traded below the level where they were when the electric carmaker entered the S&P 500 Index in December.

The stock dropped as much as 13% to $619 in New York, its biggest intraday decline since Sept. 8, before paring much of the loss to close down 2.2%. The stock was down 31% from its Jan. 25 record intraday high at its lowest point on Feb. 23.

Tesla’s early-week decline amid a wider market selloff was fueled in part by CEO Elon Musk’s comments over the weekend that the prices of Bitcoin and smaller rival Ether “do seem high.”

“Tesla is an EV play entering the golden age of EVs and there is a lingering worry that the Bitcoin sideshow could overshadow the overall EV growth story playing out for Tesla in 2021 and beyond,” Wedbush analyst Daniel Ives wrote in a note to clients.

The concerns over the value of the cryptocurrency helped erase some of Bitcoin’s gains, which had rocketed to new highs after Tesla announced two weeks ago it added $1.5 billion in the cryptocurrency to its balance sheet. Bitcoin fell as much as 18% to $45,000 Feb. 23.

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However, there are other recent factors that also may be taking the shine off Tesla’s valuation. The company’s decision to stop taking orders for the lowest-priced version of its Model Y electric SUV, as reported by Electrek earlier this week, also may be dampening investor enthusiasm, Ives said. “Tesla stopping sales of its lowest price Model Y coupled by continued price cuts have led to Street demand concerns as the bears come out of hibernation mode,” Ives added.

In addition, a continuous stream of EV development news from traditional automakers such as General Motors Co. and Ford Motor Co., as they prepare to go all-in on the electrification race, has emphasized that Tesla isn’t the only way to get exposure to the upcoming transformation in the auto sector.

Smaller electric-vehicle stocks, which typically take their daily trading cues from Tesla, also dropped sharply Feb. 23.

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