Woah, what just happened. Tesla was my most valuable stock. It was my most expensive stock at that. The company has lost a third of it’s value in only a matter of a few weeks. Retail investors are wondering what’s going on. Here are 5 reasons why Tesla stock is falling.
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#1. Bull Investors Take Tesla Stock Profits
As Tesla stock continues to plunge, bull investors have begun to take profits on the way down.
This makes a lot of sense considering Tesla stock is mainly a stock most investors will trade once it hits high profit margins.
These same investors will then buy the stock again when it is at a bargain to buy. See, Tesla doesn’t pay it’s shareholders any dividends so there’s no loyalty to holding the stock during red days. Or weeks in this case.
Because of this massive selloff, we continue to see a major decline in the stock price.
#2. Tesla Has Real Competitors Now
Competitors such as NIO and Ford Motor Company have taken lots of attention away from Tesla.
This means new retail investors are looking at a more affordable companies to invest in who also have massive potential in the EV sector.
NIO stock sits at $35.21 while Ford Motor Company sits at $12.65 as of March 8th. With these stocks being much more affordable than Tesla, it’s a more attractive option for new retail investors.
#3. Tesla’s Quality Issues Catch Up
Our love for Tesla has had many of us actually ignore the fact that these vehicles have many quality issues.
Consumers who had addressed their concerns to dealerships were ultimately told there was nothing they could do about it.
Quality issues have included:
- Gaps between body panels
- Misaligned panels
- Poor paint jobs
- Chipped glass
Well now the company’s quality issues are catching up and consumers are looking at the shinny new toy, being NIO and Ford.
These quality issues are causing sales to dive as consumers have been exposed to these faults by current Tesla owners.
#4. More Than 135,000 Vehicles Are Recalled
Not only are Tesla owners experiencing quality issues, but now the company has recalled more than 135,000 vehicles with media control unit failures.
These failures led to the loss of several safety related features in Tesla vehicles (via. CNBC)
Unfortunately, this is bad press which as we all know deeply influences the movement of the stock market.
#5. Elon Musk on Twitter
If you aren’t aware, Elon Musk has recently figured out that his influence on social media can sky rocket (pun so intended) the price of crypto currency.
However, serious shareholders might not take his enthusiasm so lightly as Doge coin is still primarily seen as a joke to most investors.
While Bitcoin is taking a much more serious approach in the finance world, Elon’s lack of concern for the volatility and participation of Doge has many investors questioning the face of Tesla’s moves.
And again, unfortunately this sort of negative perception isn’t favored by shareholders as it’s mainly perceived as reckless.
Is Tesla A Good Stock To Buy?
We personally believe Tesla is still a great stock to buy and hold. The company has a lot of potential and even though Elon can be quite silly at times, he’s an innovator and a great leader.
With tech stocks dropping at the moment, retail investors might want to consider getting in while it’s low. Why? Because this stock will eventually skyrocket back up. Only this time it won’t be where we’ve seen it recently, but higher.
Heavy buy IMO