What is the next turn for Tesla?

Tesla stock has always been more volatile than the stock market. The list of variables in this stock ranks from the outlook for demand for electric cars (i.e., oil prices) and interest in the ESG agenda, including the economic outlook and monetary policy, and ends with the tone of the tweets of its founder, Elon Musk.

But in recent days, it has also been affected by Musk’s deal with Twitter, where Tesla shares were used as collateral. For investors, the latest news of Musk’s potential break-up of the agreement to buy the social network is good news. The opposite is also true. The promotion of the deal has caused Tesla shares to sell off with acceleration in the market.

Shares in the leading electric car maker are now trading 40% below their peaks at the start of April and 45% below their all-time highs in November last year.

The company’s shares are looking better than many other pandemic favourites, which have zeroed in on all and much of the gains from the March 2020 lows, while Tesla has become about ten times more expensive in that time.

Locally, buyers are eyeing current levels to purchase Tesla, which is aggressively ramping up production and is well ahead of other electric car makers in sales in an era of record fuel prices.

On the one hand, the technical analysis points to a return of the stock from oversold territory, which could be followed by both a recovery bounce and the start of a new wave of growth that could return the price to levels above $1000 in just a few weeks.

On the other hand, the share price may not face much of an obstacle moving down another 10% from current levels, regaining half of the pandemic rally to levels near $650, where it has traded repeatedly since December 2020.

The FxPro Analyst Team