Tesla Inc shares are slipping, and it’s essential to understand the reasons behind this decline. Here’s what you need to know:
Reasons for the Decline
- Tesla shares are experiencing downward pressure due to several factors.
- U.S. auto safety regulators have opened a new defect investigation into the 2022 Tesla Model 3 over concerns that its emergency door release may be difficult to find or use during an emergency.
- The probe covers roughly 179,071 vehicles and follows a petition claiming the mechanical release is hidden, unlabeled, and not intuitive — especially for rear-seat passengers.
- Tesla has faced other legal scrutiny related to fatal crashes in recent years.
- South Korean battery-material supplier L&F disclosed that the value of its 2023 supply agreement with Tesla has collapsed from an expected $2.9 billion to just $7,386.
- L&F had been planning to supply high-nickel cathode materials for 4680 cells through 2025, but Tesla’s reduced production and the Cybertruck’s poor sales have resulted in a significantly lower demand for materials.
Technical Analysis
- Tesla is currently trading above its key moving averages, which suggests a bullish sentiment among traders.
- The stock is positioned well, trading 0.7% above its 20-day SMA, 4.5% above its 50-day SMA, and 12.3% above its 100-day SMA, indicating strong upward momentum.
- The RSI is currently at 57.30, which is in neutral territory, suggesting that while the stock is not overbought, it still has room to gain momentum before reaching overbought conditions.
- MACD is above its signal line, indicating bullish momentum despite Monday’s drawdown.
- Key support is at $383.00, while resistance is at $474.00.
Price Action
- Tesla shares were down 2.60% at $462.84 at the time of publication on Monday.
- Over the past year, TSLA has climbed 11.25%, underscoring a resilient longer-term uptrend.
- The stock now sits at 87.8% of its 52-week range, placing it closer to its highs than its lows.
- While this positioning highlights strength, traders should stay alert for potential pullbacks as the stock approaches key resistance levels.
Conclusion
Tesla’s sudden stock dip can be attributed to a combination of factors, including regulatory investigations, reduced demand for materials, and technical analysis. However, the stock’s overall trend remains bullish, with strong upward momentum and a resilient longer-term uptrend. Traders should stay informed and adapt to changing market conditions to make informed investment decisions.