By Shawn Langlois, MarketWatch
It wasn't too long ago -- like, about a month -- that Tesla was surging toward $1,000 a share in a move hailed as the "WTF chart of the year" by Wolf Richter of the Wolf Street blog.
"Tesla's market cap skyrocketed by 168% and by over $110 billion in about two months. Which was, of course, ludicrous," Richter wrote ( /). "But what was even more ludicrous -- well, outright hilarious -- was the stuff that analysts and true-believers put out there rationalizing this spike, explaining with logical-sounding gobbledygook why this type of nutty price surge was normal and appropriate for Tesla, given that its CEO walks on water or whatever."
Fast forward to the coronavirus pandemic, and the chart is even more stunning:
"Tesla is now back where it had first been in June 2017," Richter wrote. "So this is my updated 'WTF chart of the year,' a phenomenal nearly symmetrical spike, similar to an old rusty railroad spike."
The stock, however, bounced back 16% in Thursday's market rebound, after Richter's wrote this post, but still, the whipsaw reversal in just a matter of month, is remarkable
"This type of near-perfect three-month spike that went down slightly faster than up, and where the value of a company exploded by 168% -- and by $110 billion -- and then collapsed, may be unique in U.S. history," he wrote, noting that penny stocks can make this kind of move, but those spikes don't create and lose $110 billion in market capitalization in just a few weeks.
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Richter added that he admires Musk for "snookering" investors into buying more than $2 billion in new shares, as noted in the chart, on the way down from the stock's peak.
"This kind of spike shows that the market overall had gone nuts, that reality would eventually exert itself again at least a tiny little bit, and that the whole house of cards was utterly ripe for an implosion," Richter wrote. "Even now, Tesla is still overvalued by a huge amount. And reality is still far away, but getting rid of that spike was a good first step in the right direction."
Tesla(TSLA)wasn't the only stock showing signs of life in Thursday's market. At last check, the Dow Jones Industrial Averagewas up more than 300 points, while both the S&P 500and Nasdaq Compositewere also higher.
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-Shawn Langlois; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
March 19, 2020 12:29 ET (16:29 GMT)
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