The market value of Tesla Inc TSLA has plummeted by a staggering $234 billion this year, surpassing the combined worth of industry giants such as McDonald’s Corp ($212 billion), Walt Disney Co ($202 billion), and Nike Inc ($148 billion).
What Happened: Tesla’s market value has seen a significant decline of 29% in less than 10 weeks, reaching its lowest point since May this year, reported Business Insider on Thursday. This has caused the company’s market capitalization to drop from nearly $800 billion to just over $550 billion.
The decrease in value is almost equivalent to the entire market capitalizations of Netflix Inc ($259 billion) and Coca-Cola Co ($257 billion), and exceeds the total market value of American Express Company ($158 billion).
Despite the fact that Tesla’s stock is still up nearly five-fold since the beginning of 2020, it has dropped by around 60% from its peak in November 2021, when the company was valued at approximately $1.2 trillion.
There are several reasons for the waning investor interest in Tesla stock this year. These include signs of declining demand for electric vehicles (EVs) among consumers and rental car companies, intense competition in China, and the impact of the Federal Reserve’s interest rate hikes on monthly car payments.
Why It Matters: The recent decline in Tesla’s market value follows a series of challenges for the company. These include a suspected arson incident that caused a power outage at its Giga Berlin factory, potentially impacting first-quarter deliveries.
Moreover, Tesla’s struggles in China, particularly against competitors like BYD, have led to significant price reductions on certain models. As a result, the company’s China sales last month plummeted to 60,365 vehicles, the lowest since December 2022, according to the China Passenger Car Association.
Despite these challenges, Tesla’s market value still exceeds the combined worth of General Motors ($46 billion) and Ford ($49 billion).
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