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Tesla Stock Selloff Accelerates On Profit Taking

tesla stock

Tesla (NASDAQ: TSLA) stock price has been experiencing big price swings over the past couple of weeks. The stunning year to date stock price rally of more than 100 per cent before the latest selloff stunned analysts and other market players. Although TSLA share price plunged from the record level of $960 that it had hit a few days ago, the shares are still up 70 per cent year to date and up more than 220 per cent in the past six months.

Tesla stock price rally was supported by investor’s sentiments related to higher than expected growth in demand and deliveries. The company had announced to start deliveries of Model Y in the first quarter of this year. The stock price, however, lost the upside momentum following the closure of the Shanghai factory amid coronavirus attack.

TSLA Tesla, Inc. daily Stock Chart

Tesla Stock Price is Impacted by Profit Taking

Investors have started taking profits by selling the TSLA shares after they reached the highest level in history. The production suspension from the Shanghai factory along with the confirmation of delay in scheduled deliveries of Model 3 provoked investors to capitalize on previous gains.

Some analysts like Wedbush expects Tesla to meet its targets despite problems in China.  “We are currently modeling ~20K deliveries in the key China region for the March quarter. In our opinion, the current situation is more bark than bite as the aggressive trajectory of Giga 3 production and demand out of Shanghai look very strong out of the gates and the potential to hit 150k units/demand out of this region over the next year still remains intact,” forecasts Wedbush analyst Dan Ives.

Tesla Stock Selloff Accelerates...

Analysts Cut Price Targets Following Production Delays

Canaccord Genuity reduced TSLA share price ratings to Hold from Buy, suggesting investors to play prudently with TSLA. “Just as we observed a clear buy signal coming into 2020, we see the risk of China’s coronavirus as a clear headwind to the Shanghai facility, suggesting a more pragmatic position,” the firm said. Several other key analysts are advising investors to short Tesla stock following a more than 200 per cent rally.

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Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.