Tesla CEO Elon Musk lost his crown as the world’s richest man following a sharp correction in Bitcoin and a collapse in his company’s shares that some analysts believe is correlated.
Tesla (TSLA) stock fell 21% from its high of $ 890 on January 26, accelerating those losses over the past two days to $ 698. Shares of the electric vehicle maker fell 13% on Tuesday, February 23, the worst day of the action since early September.
Fox Business blamed the decline in shares this week on the company’s association with Bitcoin, citing analyst Dan Ives of Wedbush, who also said he believed the move was strategic in the long term.
“Investors are starting to tie Bitcoin and Tesla at the hip. While Tesla on paper made around $ 1 billion on Bitcoin in a month that topped all of its 2020 EV profits, Bitcoin’s recent 48-hour sell-off and heightened volatility have prompted some investors to abandon this name in the near term. , “
Tesla stock traded at around $ 865 on February 8 when the announcement to buy $ 1.5 billion in Bitcoin was made. It hit a low of $ 681 on February 23 according to Yahoo Finance. However, reports of quality control issues in China may also have affected the price.
Tesla has around 48,000 BTC, which means profits on paper were in the order of $ 1 billion by the time the asset hit its all-time high of just over $ 58,000 on February 21.
Despite this week’s price drop, the company is still a beneficiary of the Bitcoin purchase, as the asset was valued at over $ 39,000 when the purchase announcement was made (and the purchase took place before that).
The decline in Telsa shares knocked Musk off the top of Bloomberg’s billionaire index, with recent losses reported at $ 3.56 billion. Jeff Bezos tops the list again with an estimated total net worth of $ 187 billion, while Musk has $ 180 billion according to Bloomberg.
At the time of writing, Bitcoin prices had corrected 17% to around $ 48,000, marking a drop of $ 10,000 in just three days. In terms of the pullback, markets are used to much bigger markets such as the downturn in mid-January which resulted in a 30% correction for BTC.