Tesla's Tumble Obliterates Half of Meteoric 2020 Rally

The tailspin in Tesla Inc. shares accelerated Tuesday as a report of a plan to temporarily halt production at its China factory rekindled fears about demand risks and put the stock on pace for its longest losing streak since 2018.

Shares of the Elon Musk-led company fell as much as 8.3% to $112.88, for a seventh straight day of declines. The electric-vehicle maker’s market valuation has shrunk to roughly $357 billion, below that of Walmart Inc., JPMorgan Chase & Co. and Nvidia Corp. This latest selloff will cost Tesla its position among the 10-highest valued companies in the S&P 500 Index, a distinction it has held since joining the benchmark in December 2020.

News of reduced output in Shanghai comes on the heels of last week’s report that Tesla was offering US consumers a $7,500 discount to take delivery of its two highest-volume models before year-end, combining to intensify concerns that demand is ebbing. For Tesla, whose valuation is pinned on its future growth prospects, these worries reflect a significant risk.

“Most of the stock’s weakness this year is due to indicators showing flagging demand globally,” said Craig Irwin, an analyst at Roth Capital Partners. Tesla’s estimated revenue growth “is still amazing, but not $385 billion market valuation-type amazing,” he said, referring to the value at the end of last week.