In light of a week March trading month for stocks, selling pressure mounted for Tesla, Inc. (NASDAQ: TSLA). The stock lost one-fifth of its value in that time and is barely above yearly lows. A confluence of two events hurt the stock. The question for investors is now about confidence in its CEO and in the company’s prospects. Despite the drop, markets will not give up on Tesla that quickly.
Selling in Tesla stock accelerated on the week of March 26, pulling the stock lower by 14% when a driver in a Model X died. Tesla also reported that it would not meet its Model 3 output guidance. Parts and skills shortage is so significant that the company will shift Model X and Model S production staff to the Model 3.
Bears Rejoice
Short float on TSLA stock is excessively high at 22.81%. A further drop in the stock could give bears an exit point to solidify the paper gains. The problem with betting on Tesla for too long is that the brand is too strong and the CEO has the influence to raise debt or sell stock to meet its financial obligations. The SolarCity unit is probably cash flow positive after the company restructured the unit.
Takeaway
Betting against Tesla may work against the bear at this time. Until Tesla bond sales weaken, the stock may rebound when markets bounce back.
Tech Insider
