Why Tesla Shares Hit a 2-Year Low Today

What happened

Tesla (NASDAQ: TSLA) shares continued a recent slide, hitting a two-year low Monday. As of 2:25 p.m. ET, the stock was down 6.8% to about $168 per share. That’s the lowest level since November 2020.

The reasons for today’s decline are some of the same that have contributed to the more than 40% drop in the stock over the last three months. But there are some new developments as well.

So what

Investors have been shedding Tesla shares as CEO Elon Musk has had to sell some of his own this year to fund his Twitter acquisition. Musk has sold about $19 billion in total related to the Twitter purchase in 2022. He has also had to put his time and energy into the social media company recently.

Image source: Tesla.

Today’s drop also can be attributed to a newly announced recall, as well as renewed concerns over COVID-19 restrictions in China.

Now what

China announced three COVID-19 deaths in its capital, Beijing, over the weekend. That marked the first official fatalities attributed to the virus in China since May. As cases continue to increase, authorities also locked down the most populous portion of the large southern port city of Guangzhou. Tesla’s largest plant is in Shanghai, and investors fear an interruption in sales from that facility could have noticeable impacts on the company’s fourth quarter.

It also didn’t help investor sentiment when a recall of 321,000 Tesla vehicles in the U.S. was announced over the weekend. That said, the news was more of a headline than a concern for impacts to the business, however. The recall was for a rear taillight issue that the company will fix with over-the-air updates.

But investors see several things piling on right now, and Tesla stock still holds a high valuation by traditional metrics. Its price-to-earnings (P/E) ratio remains above 50 on a trailing-12-month basis. So the recent news affecting the business and the brand is moving the stock lower and lower. For long-term investors, that could be an opportunity to begin dipping into the stock, as the business’ prospects continue to grow.

10 stocks we like better than Tesla
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

They just revealed what they believe are the ten best stocks for investors to buy right now… and Tesla wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of November 7, 2022

Howard Smith has positions in Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Source Link

Read in Hindi >>