Tesla CEO Elon Musk has lost his crown as the world’s richest man following a sharp correction in Bitcoin and a drop in his company’s shares that some analysts believe are correlated.
Shares of Tesla (TSLA) are down 21% from their high of $ 890 on Jan. 26, accelerating those losses in the past two days into a drop to $ 698. Shares of the electric vehicle maker fell as much as 13% Tuesday, February 23, the worst day of action since early September.
Fox Business has blamed this week’s stock slump on the company’s association with Bitcoin, citing Wedbush analyst Dan Ives, who also noted that he believes the move was strategic for the long term.
Investors are starting to link Bitcoin and Tesla at the hip. While Tesla on paper made roughly $ 1 billion worth of Bitcoin in a month that surpassed all of its 2020 EV earnings, the recent 48-hour selloff in Bitcoin and added volatility have led some investors to exit this name. in the short term. “
Tesla shares were trading at around $ 865 on February 8 when the announcement was made that it had bought $ 1.5 billion worth of Bitcoin. It bottomed out at $ 681 on February 23, according to Yahoo Finance. However, reports of quality control problems in China may have affected the price as well.
Tesla owns an estimated 48,000 BTC, meaning that paper earnings were in the $ 1 billion region when the asset hit its all-time high of just over $ 58,000 on February 21.
Despite this week’s price drop, the company still makes a profit from the purchase of Bitcoin, as the asset was priced one touch above $ 39,000 when the purchase announcement was made (and the purchase was made). before that).
The fall in Telsa shares has knocked Musk off the top of the Bloomberg Billionaires 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 by 17% to around $ 48,000, marking a $ 10K drop in just three days. In terms of pullbacks, markets are used to much bigger ones, like the mid-January pullback, which resulted in a 30% correction for BTC.