Shares in Tesla were set to plunge into the red for the year on Tuesday, hit by a broad selloff of high-flying technology stocks and the fall of bitcoin, in which the electric carmaker recently invested $1.5 billion.
Tesla was down, at 1121 GMT, more than 6% in US premarket deals after a 8.5% drop during the previous session.
The company led by Elon Musk has had a stellar ride since 2020, which it started at nearly $85 per share, before hitting the $900 mark on the 25th of January.
Currently trading at almost $673 in pre-market transactions, the stock has lost 25% from its peak, which is above the 20% level which technically defines a bear market.
The world’s most popular cryptocurrency, Bitcoin, has also swung into a bear market, falling from a peak of $58,354 on Feb. 21 to a low of $45,000 earlier today.
A Germany-based trader said he was “taking chips off the table” on Tesla as its $1.5 billion investment in bitcoin could “backfire now”.
Among the factors contributing to the rise of the stocks is surging retail and institutional demand for “environmental, social, and governance” (ESG) friendly investments.
“There are a lot of reasons – purely from a sustainability angle – to hold Tesla, it is part of that transformation towards a more sustainable business model,” Valentijn van Nieuwenhuijzen, chief investment officer at asset manager NN IP told Reuters on Friday.
He added however that Elon Musk’s decision to invest in bitcoin could weigh on Tesla’s ESG rating.
The billionaire has been criticized for lauding bitcoin prior to Tesla’s purchase of the digital currency.
Analysts at Barclays said there had been a drop of conversations about the electric car makers in the Reddit’s WallStreetBets forum, which could explain some of the loss of appetite for the stock.