Tesla Sheds Almost $200B In Market Value Amid Recession Fears And Internal Woes – One-Fifth Of Its Peak Value

Following a significant surge in value, Elon Musk’s Tesla Inc. TSLA has lost nearly $200 billion in market capitalization, a fifth of its peak value, Business Insider reported.

The EV-maker’s value had increased by about 170% to reach $291 on July 19 but has since declined. This has resulted in Tesla’s market cap dropping to approximately $730 billion as of Tuesday’s close.

The drop is attributed to a combination of inflation, increased interest rates and worries about a potential recession. Investors are now anxiously awaiting Federal Reserve chair Jerome Powell’s forthcoming speech for hints about the Fed’s future moves.

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Increased interest rates are generally unfavorable for high-growth stocks like Tesla, as they diminish profitability through higher borrowing costs and discourage investment in equities.

Besides external economic factors, Tesla’s troubles may also stem from within the company. Gordon Johnson, founder, and CEO of GLJ, expressed concerns about Tesla’s “exploding” inventories and speculated that it might force the company to reduce prices.

Additionally, Johnson noted that since Cathie Wood‘s prediction in June that Tesla shares could reach $2,000, Ark Invest has decreased its holding by over 17.6%, indicating a possible loss of faith from one of Tesla’s major supporters.

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