Tesla Experiences Record Volatility Amid Massive Short Squeeze and Virus Fears
Tesla stock swings wildly as a massive short squeeze drives shares to nearly $970 before coronavirus fears trigger a sharp reversal. Unprecedented trading volume highlights the extreme investor frenzy surrounding the electric vehicle maker.
Tesla experiences one of its most volatile trading weeks ever as the stock surges nearly 20% on Monday and an additional 14% on Tuesday to reach an intraday high of $968.99. This massive rally forces short sellers to buy back shares at higher prices to cut their mounting losses, creating a textbook short squeeze that drives the stock even higher. Analysts describe the rapid movement as irrational exuberance, noting a complete disregard for past fundamentals.
The explosive upward momentum abruptly halts on Wednesday as fears of production and sales delays in China take hold. Tesla temporarily closes its stores in the region due to the coronavirus outbreak, causing shares to plummet 17.2% in a single day. This sharp reversal raises concerns among market watchers that the stock has become a speculative bubble.
Trading volume shatters all previous company records throughout the chaotic week, with an average of roughly 18 million shares typically changing hands on a normal day. Monday, Tuesday, and Wednesday see staggering volumes of 47 million, 60 million, and 48 million shares, respectively, before the stock finally stabilizes with minor gains and losses on Thursday and Friday.