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Tesla’s chief executive Elon Musk’s wealth shrunk by $16.3 billion in a single day as the company’s shares tanked, Bloomberg reports.
Tesla’s stock plunged by the most in its history yesterday, logging a total day loss of 21.1 percent to $331.21 apiece, according to MarketWatch. The drop was the result of a selloff that followed the 1-for-5 stock split that the company announced after its stock reached a record high, making it the most valuable car company in the world.
The selloff began soon after when Tesla announced a new share issue of $5 billion. A large shareholder cut its stake soon after, with the stock shedding a cumulative 33.7 percent since then. However, between January and September this year, the company’s stock has gained close to 500 percent, so some sort of correction was perhaps long overdue.
But in addition to the selloff prompted by profit-takers, there was another event that led to yesterday’s record plunge. GM and Nikola announced a partnership that will see GM take an 11-percent stake in the hydrogen and EV startup and in exchange, would share with the younger company its electric drivetrain, battery, and other EV-related and hydrogen-related technology.
The stake is worth about $2 billion and will give GM a seat on Nikola’s board of directors. As Nikola is widely seen as a challenger to Tesla’s dominance on the EV market, the news immediately dampened the attractiveness of the Tesla stock.
Yet the electric car maker has so far had a good year, with four consecutive profitable quarters—an unprecedented achievement for a company that had had many shareholders all but despair over its cash-burning habits. Despite this, the S&P 500 Index Committee decided not to add it to its flagship index even as it added to its Etsy, Teradyne, and Catalent.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com