Tesla fell 4.6% in premarket trading Friday, heading for its first four-day losing streak since pandemic fears were at their height in mid-March.
The electric-vehicle maker’s ongoing rout came as US tech stocks fell for a second day. Thursday’s plunge sent the Nasdaq 100 Stock Index tumbling 5.2%, its biggest decline since March 16. That erased about $730 billion of value from the high-flying benchmark, which prior to Thursday’s decline had gained 78% from its March lows.
The index had previously gained in 11 of 13 sessions, hitting fresh records almost daily. Tesla had added nearly 500% this year through Monday’s close.
Apple fell 2.9% premarket on Friday, Amazon.com lost 1.3%, Microsoft slid 1.1%, Alphabet was down 1%, Facebook fell 1.9% and Netflix lost 1.8%.
Wedbush analyst Daniel Ives defended the sector, saying tech stocks could still have another 20% to 25% to run. Any weakness is an opportunity to buy “secular growth stories in cloud, cyber security, and tech stalwart FAANG names,” especially Apple and Microsoft, he said.
While Thursday’s “massive sell off will cause some white knuckles on the Street as fears of a tech bubble and stretched valuations become the talk of the town, we continue to believe the secular growth themes around the tech sector are unprecedented with the Covid backdrop accelerating growth stories by 1-2 years in some cases,” Ives wrote in a note.
Not everyone is as optimistic. Momentum begets momentum, said Phillip Toews, chief executive officer of asset manager Toews Corp. If technology stocks go south “that’s like the beginning of the end for the whole market,” he said.
If the market enters a free-fall, it potentially affects all sectors, Toews — who manages $1.9 billion in assets — said by phone.
“Even if it doesn’t make sense, everything can fall together,” he said. “It can turn into a panic.”