Tesla CEO Elon Musk has lost his crown as the richest man in the world after a sudden correction in Bitcoin and a slump in his company’s shares that some experts say is associated.
Tesla’s stock (TSLA) fell 21 percent from its record of $890 on January 26, accelerating those declines in the last two days to $698. Shares of the electric vehicle producer fell as much as 13 percent on Tuesday, Feb. 23, the worst stock day since early September.
Fox Business blamed this week’s price decline on the company’s affiliation with Bitcoin, citing analyst Dan Ives of Wedbush, who also noted that he thinks the move is a long-term strategic one.
“Investors are starting to tie Bitcoin and Tesla at the hip. While Tesla on paper made roughly a $1 billion on Bitcoin in a month that exceeded all its EV profits from 2020, the recent 48 hour sell off in Bitcoin and added volatility has driven some investors to the exits on this name in the near-term,”
Tesla’s shares traded at about $865 on Feb. 8 when the news was made that it had acquired $1.5B from Bitcoin. It was $681 on Feb. 23, according to Yahoo Finance. However, the price may also have been influenced by news of quality management problems in China.
Tesla controls an estimated 48,000 BTC, which means that paper income in the area amounted to $1 billion when the commodity reached its all-time high of just over $58,000 on Feb. 21.
Despite this week’s price decline, the company still has a bitcoin buying advantage, since the currency was valued at a price of more than $39,000 before the purchase announcement was produced (and the buy happened prior to that).
The Telsa stock fall took Musk off the top of Bloomberg’s Billionaires Index, with recent losses estimated at $3.56 billion. Jeff Bezos is back on the list with an overall net total of $187 billion, while Musk has $180 billion.
At the time of writing Bitcoin values had been reversed by 17 percent to about $48,000, representing a $10K slide in just three days. In terms of pullbacks, stocks are used for even bigger ones, such as the mid-January exit, which resulted in a 30% correction for BTC.