Tesla (TSLA) Stock Analysis

0
3

At the time of writing this analysis, Tesla (TSLA) shares were valued at $167.87, 6.84% below the last close.

However, the electric vehicle giant could see a much bigger drop as China’s plans to tighten Covid-19-related restrictions cause further disruption to the industry and hit the company’s sales.

Technical Analysis

While most EV companies, including Tesla, saw their shares skyrocket in 2020 and 2021, this year didn’t bring good news.

Tesla’s stock price has dropped at least 44% this year, reaching $168, which is 50% below its value in 2021.

As of the close on November 4, the company’s shares were trading at $207.47. However, despite opening on November 7 slightly above ($208.65), the price has been in a tailspin ever since.

On November 9, Tesla’s shares were down to $177.59 at its close. However, on Thursday, November 10, they rallied, reaching $190.72 at the close and rising further to $195.97 on Friday.

After the weekend, on November 14, the company’s shares dipped to 190.95 before recovering to reach 194.42 on Tuesday. However, since Wednesday, November 16, Tesla’s stock has come into a tailspin again.

On Monday, November 21, the electric car maker’s shares hit a two-year low, falling 6.8% to reach $168 per share. It’s the lowest price that Tesla’s shares have reached in the last two years.

The company’s value has also been affected by its CEO Elon Musk’s actions, as the business mogul sold some of his shares to finance the purchase of the social media platform Twitter.

In 2022 alone, Musk has sold at least $19 billion in stocks. Many investors have followed in his footsteps, dumping their shares in the company, too.

In summary, the fall in Tesla shares is attributed to the same factors that have been impacting the EV manufacturer’s value in recent months: the massive sale of shares and Mr. Musk’s moves.

Many believe that Mr. Musk, a visionary CEO with great influence among investors, is distracted from Tesla to focus on his new acquisition. Actually, since the business mogul bought Twitter, the automaker’s shares are down around 30%.

However, there may be other things influencing the company’s share price. First, investors should consider China’s situation.

Over the weekend, China announced that three Covid-19 patients had died in the capital Beijing. Those were the first Covid-related fatalities since May. In response, local authorities intensified disease control measures.

In addition, Chinese authorities were also forced to lock down the most populous part of the southern port city of Guangzhou after coronavirus cases soared.

Tesla’s largest plant is in Shanghai. Therefore, investors fear China’s tight restrictions will have a significant impact on the company’s fourth quarter.

Also, the electric vehicle competition in China is tough. Recently, the company was forced to lower its EV prices in the country due to other similar companies’ competitive rates.

Tesla has also faced logistical problems and is struggling to deliver its electric cars on time. However, it still seems unlikely that the manufacturer will manage to meet its delivery growth target of 50% each year by 2022.

Another development that affected the company’s stock was the recall announcement. Over the weekend, Tesla announced that it would recall 321,000 vehicles in the United States.

Fortunately, however, the news did not have a strong impact on the business at the end of the day. The move was due to some issues that some vehicles had, and the company hopes to solve them with over-the-air updates.

Tesla (TSLA) Analysis Conclusion

While traditional metrics give Tesla a high valuation despite being in a permanent decline for a long time, deciding to invest in this company’s stock should be well thought out.

Tesla is not the only company in the industry facing problems that could hurt its value. In fact, EV manufacturers continue to struggle amid supply chain shortages, rampant inflation, high cost of materials, semiconductor shortages, lockdowns, and more.

Therefore, in the short term, there are still many factors that can cause Tesla’s shares to continue to fall. However, considering their high valuation, these stocks could be good investment opportunities for those with a long-term strategy, as the EV industry continues to grow.

FAQs

Could Tesla Shares Go Below $10?

In the near future, Tesla shares are unlikely to fall as far as $10 as the company continues to have a high market valuation.

Are Tesla Stocks a Good Investment?

Depending on the strategy, Tesla’s stock could represent a good long-term investment. However, each investor must weigh all the advantages and disadvantages.

What is the Highest Price Tesla Stock Could Reach?

Considering the stock market’s performance over the past month, Tesla’s shares are unlikely to break above $250 any time soon.