Tesla (NASDAQ 🙂 is once again in a deep bearish spell. Shares of the electric carmaker have fallen 27% in the past three months, outperforming fast-growing technology stocks.
After hitting a record high of $ 900.40 on January 27, the stock closed at $ 571.69 on Thursday, down about 36%. Over the same period, tech-heavy declined 3%.
This volatile trade is not a new phenomenon for investors. Over the past five years, Tesla has produced many boom-and-bust cycles that have badly burned some investors. The latest weakness comes after a period of rapid gains in 2020, which saw the stock increase by more than 700%.
For investors on the sidelines, the big question is whether this sale offers an opportunity to buy Tesla. Or is it the start of a much deeper correction? In the short term, we suggest staying on the sidelines as there isn't much that could create even more excitement around this name.
The latest evidence that Tesla has no short-term positive catalysts came from the company that did not provide much insight into 2021 sales volumes. Tesla reiterated that it expects 50% annual growth in deliveries "over a multi-year horizon. ". That means approximately 750,000 cars delivered this year. The unchanged outlook was not encouraging to some analysts and investors who had hoped for more details after a burst of sales figures in the first quarter.
The latest sales data from China, the company's second largest market, has also contributed to uncertainty about Tesla's outlook this year. Sales of Tesla's locally made cars in China fell to 25,845 in April, from 35,478 units in March, according to data from the Chinese Passenger Car Association released Tuesday. Of those sales in April, 14,174 electric vehicles were exported, partly as a result of demand from the European market. also facing a shortage of French fries. While that problem isn't unique to Tesla, it's significant enough to hurt its year-end production goals. Tesla & # 39; s CEO Elon Musk told analysts last month that he expects the shortage of chips to continue to affect the company in the second and third quarters.
Along with this changing backdrop for growth, comes Musk's turnaround. The company's CEO is not taking a moment to divert investors' attention from Tesla's core business of making and selling cars. His surprising decision to suspend acceptance of Tesla vehicle purchases is the latest setback to his credibility.
In a post on Twitter (NYSE 🙂 on Wednesday, Musk cited his concerns about "rapidly increasing use of fossil fuels for Bitcoin mining and transactions," due to his reversal, which came after his active involvement in recent months to digital promote currency. .
Dan Ives of Wedbush, who outperforms Tesla, said in a note that the move was a & # 39; shocker & # 39; and could increase the volatility of the electric vehicle supply.
In a note to customers, Ives wrote:
"Musk is now concerned about the use of fossil fuels in Bitcoin mining and transactions, but the nature of Bitcoin mining has not changed in the past three months, indicating why the crypto transaction reversal three months later was a very surprising and confusing movement for both Tesla and crypto investors, ”said Ives.
Bottom Line
Tesla stocks are more vulnerable in the mega-technology group at a time when investors are avoiding growth stocks due to concerns about and the future interest rate outlook. We don't think now is a good time to buy Tesla stock as this withdrawal has more leeway.
