The shares dropped as much as 5.3% on Monday, retreating more than 20% from the record high of $1,229.91 touched on November 4.
A stock enters a bear market when it falls 20% on a closing basis. The slump was triggered by a Twitter poll from Musk asking his followers whether he should sell some of his shares in the company, followed by news of him unloading stock worth about $7 billion.
Shares may have faced some additional pressure from the blockbuster debut of Amazon and Ford-backed electric-truck maker Rivian last week, which some said could become an option for institutional investors who previously only had Tesla to play the EV space. Rivian shares were up another 14% Monday.