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Is Tesla Stock A Buy In Current Tech Sell-Off?

By Investing.com (Haris Anwar/Investing.com)Stock MarketsMay 14, 2021 09:03AM ET
www.investing.com/analysis/is-tesla-stock-a-buy-in-current-tech-selloff-200579983
Is Tesla Stock A Buy In Current Tech Sell-Off?
By Investing.com (Haris Anwar/Investing.com)   |  May 14, 2021 09:03AM ET
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Tesla (NASDAQ:TSLA) is again in a deep bearish spell. Shares of the electric car-maker have shed 27% during the past three months, massively underperforming the high-growth technology stocks. 

After reaching a record high of $900.40 on Jan. 27, the stock closed Thursday at $571.69, down about 36%. During the same period, the tech-heavy NASDAQ-100 Index fell 3%. 

Tesla Weekly Chart.
Tesla Weekly Chart.

This volatile trading is not a new phenomenon for investors. During the past five years, Tesla has produced many boom-and-bust cycles that burned some investors badly. The latest weakness comes after a period of meteoric rise in 2020 that sent it shares soaring more than 700%. 

For investors on the sidelines, the big question is whether this sell-off offers an opportunity to buy Tesla. Or, is it the beginning of a much deeper correction? In the short-run, our suggestion is to stay on the sidelines, as there isn’t much out there that could create further excitement around this name.

The latest evidence that Tesla is lacking short-term positive catalysts came from the company’s first-quarter earnings that didn’t offer much insight into 2021 sale volumes. Tesla reiterated that it expects 50% annual growth in deliveries “over a multi-year horizon.” That implies deliveries of about 750,000 cars this year. The unchanged guidance wasn’t encouraging for some analysts and investors who had hoped for more detail after a blowout first-quarter sales numbers. 

The latest sales data from China, the company’s second-biggest market, have also added to uncertainty about Tesla’s outlook this year. Sales of Tesla’s locally made cars in China dropped to 25,845 in April, down from 35,478 units in March, according to data from China’s Passenger Car Association released Tuesday. Of those April sales, 14,174 EVs were exported, due, in part, to demand from the European market.

Chip Shortages

In addition to this weakening demand in China, global car-makers are also facing supply shortages of chips. Though that issue isn’t unique to Tesla, it’s significant enough to hurt its year-end production goals. Tesla’s CEO Elon Musk told analysts last month that he expects chip shortages to continue to impact the company in the second and third quarters.

Along with this changing backdrop for growth, comes Musk’s u-turn. The company's chief executive doesn’t spare a moment to divert investors’ attention from Tesla’s core business of making and selling cars. His surprise decision to suspend accepting Bitcoin for Tesla vehicle purchases is the latest setback to his credibility.

In a post on Twitter (NYSE:TWTR) on Wednesday, Musk cited concerns about “rapidly increasing use of fossil fuels for Bitcoin mining and transactions,” for his reversal, which came after his active involvement in recent months to promote digital currencies. 

Wedbush’s Dan Ives, who has an outperform rating on Tesla, said in a note that the move was a “shocker” and could increase volatility for the electric vehicle stock.

In a note to clients Ives wrote:

“Musk is now concerned about the use of fossil fuels in Bitcoin mining and transactions, yet the nature of Bitcoin mining has not changed in the last three months, which speaks to why backtracking on the crypto transaction three months later is a very surprising and confusing move to both Tesla and crypto investors,” Ives said. 

Bottom Line

Tesla stock is more vulnerable in the group of mega tech stocks at a time when investors are avoiding growth stocks on worries related to inflation and the future interest-rate outlook. We believe this is not a good time to buy Tesla stock as this pullback has more room to run.

Is Tesla Stock A Buy In Current Tech Sell-Off?
 

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Is Tesla Stock A Buy In Current Tech Sell-Off?

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Comments (20)
DAS Ibnu Safian
DAS Ibnu Safian May 17, 2021 6:58AM ET
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Is all the game of capitalist
Steven Jacobs
Steven Jacobs May 16, 2021 9:13PM ET
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Tesla doesn’t offed guidance anymore bc they dont’t want to hear stupid analyst judgement. No one can trust analysts and everone knows that
Jan Buyle
Jan Buyle May 16, 2021 6:08PM ET
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It's one of the biggest 'sell' in the market...
Steven Jacobs
Steven Jacobs May 16, 2021 6:08PM ET
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Lmao. It just bounced off oversold. Now it goes up
Ma bash
mp03 May 16, 2021 10:38AM ET
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Expecting 400s as valuations start to matter again..
Steven Jacobs
Steven Jacobs May 16, 2021 10:38AM ET
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Lay off the glue
Emanuel Dabah
Emanuel Dabah May 16, 2021 5:16AM ET
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Avoid short term , short long term
TL Chan
TL Chan May 14, 2021 7:45PM ET
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Wood keep saying Tesla us in explosive stage, 150% increase in revenue and delivery is a minimum requirement!
Venkataramanan Segar
Venkataramanan Segar May 14, 2021 5:00PM ET
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50% YoY sales volume is pretty boring for Inverstors ? Its not enough ? What do they expect ? A 100% YoY perhaps !
Hammad ulahad
Hammad ulahad May 14, 2021 1:29PM ET
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Wonderful analysis. Agreed every bit of it
Adeeb Bustani
Adeeb Bustani May 14, 2021 11:43AM ET
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The time to buy is always the time that everyone else is selling, and the same time that everyone is telling you to sell
YouTube Account
YouTube Account May 14, 2021 11:38AM ET
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if retail investors don't buy who will hodl the bag? get in there guys, elon needs bag hodlers!!
Christopher Loveless
Christopher Loveless May 14, 2021 11:38AM ET
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You trading or investing? If you trade you might get burned, if you are investing then this is a gift of a discount. No one can prefict the bottom so buy the whole way down and watch over time as it comes right back up. Short term=small mind.
Adri Mansvelder
Adri Mansvelder May 14, 2021 11:37AM ET
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Do the maths and how many Tesla cars were sold? The competition moves in quickly and will wipe out the first mover advantage. Don't gamble and if you got shares, sell them while they still high! Space ships pollute, and another contradiction as it is not in line with green economy.
Efecan Aral
Efecan Aral May 14, 2021 11:36AM ET
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Nice, there are so many bad articles around Tesla. I think we are close to the breakout 📈
snehalbhai patel
snehalbhai patel May 14, 2021 11:33AM ET
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Investors should stay away from this stock. Lots of manipulation by its executives at the top. Who are taking advantage of regular people.
Matthew Low
Matthew Low May 14, 2021 11:33AM ET
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So how many shares did you short?
Nico Penacho
Nico Penacho May 14, 2021 11:32AM ET
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easiest buy ever
Joshhua Ray
Joshhua Ray May 14, 2021 10:16AM ET
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Technology fuling Tesla will always out last naysayers.
Mike Caldera
Mike Caldera May 14, 2021 9:50AM ET
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Dead cat 😸😸😸
Joshhua Ray
Joshhua Ray May 14, 2021 9:50AM ET
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I have 6 💛💛💛💛💛💛 more. 🤔
Stephen Fa
Stephen Fa May 14, 2021 8:49AM ET
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Tesla has major competition arriving and raw materials shortages.
Casino Crypt
CasinoCrypt May 14, 2021 6:38AM ET
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I would agree on analysis but greater fool theory prevails in markets now. There is always a greater fool who will pay more regardless. Good jobs report markets are up and bad reports the markets are up.
Thomas Vonach
Thomas Vonach May 14, 2021 5:10AM ET
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Musk is a genius and unbalanced. Market manipulator.
Casino Crypt
CasinoCrypt May 14, 2021 5:10AM ET
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Just Musk?  - I made a lot of money out of Trump's tweets early morning and late Fridays.
Adri Mansvelder
Adri Mansvelder May 14, 2021 5:10AM ET
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Casino Crypt  Yes, Musk and Trump got the same tweet and behaviour characteristics!
 
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