Tesla loses all the gains from 35% rally stoked by Hertz deal, broader market sags
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Tesla slid 3.5 per cent on Dec 20, closing at US$899.94.
PHOTO: REUTERS
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NEW YORK (BLOOMBERG ) - Tesla's stock went on a tear after an October deal with Hertz Global signalled broader mainstream adoption of its electric cars.
But that 35 per cent rally is gone now. Tesla slid 3.5 per cent on Monday (Dec 20), closing at US$899.94 (S$1,230).
That put the shares below where they had closed right before the US$4.2 billion Hertz deal was revealed on Oct 25. The stock, which peaked on Nov 4, is down 21 per cent in December, poised for the worst month since the pandemic-fuelled rout in March 2020.
Hertz's order for 100,000 vehicles had sent Elon Musk-led Tesla's shares on a near-vertical rise, pushing the company's valuation well above the coveted trillion-dollar mark.
Yet, the rally soon started wobbling after Mr Musk started offloading some of his stake in the company. Tesla's market cap is now about US$904 billion.
A broad market decline weighed on Tesla on Monday, with renewable-energy firms such as solar companies and other electric-vehicle makers broadly underperforming after US Senator Joe Manchin said he would not support President Joe Biden's spending plan.
Nikola fell 7.3 per cent, the most since Nov 18, while Rivian Automotive dropped 7.9 per cent. Workhorse Group was lower by 8.9 per cent, and Lordstown Motors fell 8.2 per cent.
The move has sent the broader market tumbling as well. Investor sentiment sagged on Monday as concern about Mr Biden's economic agenda and the Omicron coronavirus surge dragged down stocks. Traders said lower volume ahead of the holidays exacerbated market moves.
Goldman Sachs Group economists cut their US growth forecasts after Democratic Senator Manchin blindsided the White House by rejecting Mr Biden's roughly US$2 trillion tax-and-spending package.
Meanwhile, Europe's biggest nations weighed more Covid-19 restrictions.
On Monday, the S&P 500 had its biggest three-day drop since September, led by losses in financial and material shares. Bonds fell. The dollar was little changed.
"There's kind of two dynamics going on. Probably the most important one is the imminent reduction in liquidity," said Mr Jay Hatfield, chief executive at Infrastructure Capital Management.
"On top of that, you have the Omicron concern."
