Tesla’s stock price has crossed into bear territory, sparking concerns over the company’s future prospects.
Shares of embattled carmaker Tesla have reached a ‘death cross‘ this week, indicating heightened volatility and the potential for future losses. A ‘death cross‘ is a financial term meaning when a company’s 50-day moving average crosses below its 200-day average.
The stock’s value has increased by nearly 10-fold since 2020, driven by strong demand for electric vehicles and the company’s expanding product offerings.
Tesla‘s stock price is influenced by various factors, including quarterly earnings reports, production milestones, and regulatory updates.
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The first time Tesla has flashed a death cross since May 2022, it signals rough days ahead. While there’s no guarantee the carmaker’s shares are about to crash — ‘death crosses have also been known to lead to a quick rebound’ — the indicator has historically signalled major declines.
Tesla is facing clear real-world headwinds. Since December, Tesla shares have dropped by around 50 percent, shortly after Donald Trump was elected. The company’s CEO Elon Musk‘s highly divisive behavior, including an embrace of far-right ideologies and the plundering of government agencies, has spawned a protest movement against the already tarnished brand.
Sales have plummeted across the globe, with weary consumers opting for a growing number of alternatives, many from China. Even ‘Trump organizing a bizarre sales event for Tesla on the lawn in front of the White House last month’ appears to have done little to reassure buyers and investors alike.
Investors are bracing for bad news ahead of Tesla‘s Q1 earnings call next week. Early delivery numbers for the January-March period have already fallen well short of expectations. The broader market is also experiencing major volatility, with both the S&P 500 and Nasdaq 100 indexes flashing a death cross formation on Monday.
While Musk‘s long-rumored departure from the White House caused Tesla shares to rally earlier this month, there’s still no clear indication of when the billionaire will actually leave his post as the de facto leader of the so-called Department of Government Efficiency. Investors have long accused him of becoming distracted and abandoning the carmaker in favor of side quests like gutting federal agencies.
The damage has already been done for Tesla‘s brand, warns longtime Tesla investor and Wedbush Securities analyst Dan Ives. Whether a narrowing focus on advanced driver assistance technologies and robotics will save Tesla from financial doom remains to be seen. Musk has promised to show off an autonomous ‘Cybercab‘ before the end of 2025, an extremely ambitious technological undertaking that could take years to pay off.
The EV maker is still reeling from steep tariffs aimed at the automotive industry, which could drive costs even higher, further complicating a much-needed recovery.
Tesla tariffs refer to the taxes imposed on electric vehicles (EVs) imported into the United States.
In 2018, the US government imposed a 25% tariff on EVs imported from China, including those manufactured by Tesla.
The tariffs were part of a broader trade dispute between the US and China.
As a result, Tesla's Model 3, which is assembled in Fremont, California but has some components sourced from China, became subject to the tariffs.
However, 'we were able to mitigate the impact by renegotiating with our suppliers and sourcing alternative parts' was not present in the original text.
- futurism.com | Tesla Stock Hits Dreaded Death Cross
