Tesla has long seemed immune to traditional measures of a company's value, but increased competition and a disappointing crash rating may be bringing the company back down to Earth.
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Tesla enters a bear market (TSLA)
Shares are down 20% from their June 23 high.
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Tesla was trading down 5.87% on Thursday. Shares are down about 20.4% from their June 23 high of $386.99, meaning the stock is in a bear market now.
The electric car maker is looking at another day of selling after falling short of the highest crash test rating by the .
Thursday's selling makes for Tesla's sixth decline in eight sessions and the largest slide this year.
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Some investors don't understand Tesla's huge valuation, currently $46.88 billion. Due to Thursday's losses, the company is no longer the most valuable US automaker.
Even CEO Elon Musk has called his company's valuation into question. Back in May, he told The Guardian, "I do believe this market cap is higher than we have any right to deserve."
Some of those traditional car makers are ramping up their electric car offerings. Volvo announced on Wednesday that all of its cars produced during and after 2019 will be either fully electric or hybrid. Additionally, Jaguar is set to release its first electric SUV, a direct competitor to Tesla's Model X, in 2018.
Many traditional car companies are also working on their self-driving car technologies, all of which means increased competition to Tesla's previously unchallenged business model.
In addition to the increased competition, Goldman Sachs sees production levels plateauing at Tesla, which lead the firm to lower its price target on Wednesday from $190 to $180, both of which are much lower than Tesla's current price.
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Tesla's stock has risen 44.24% this year, including Thursday's drop.
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