Tesla Inc., the uncontested EV heavyweight, has taken its fair share of blows.
A string of unfavorable articles has sent the stock (NASDAQ:TSLA) to its lowest level since the three-for-one split, which is down more than 30% year to date. The increased trading activity during the slump shows that investors anticipate more negative news.
It’s also bad for the S&P 500 because Tesla is the fifth biggest holding. Each of the benchmark’s five leading horses is down 20% or more in 2022.
Among Apple, Microsoft, Alphabet, Amazon, and Tesla, the EV manufacturer has the most potential for long-term development. Tesla stock (NASDAQ:TSLA) forecasts imply that the volatile stock may have the most to lose in a bearish market.
Why is Tesla’s stock falling?
Tesla issued a disappointing Q3 vehicle update ahead of the company’s earnings release next week. According to the October announcement, 343,830 automobiles were delivered over the summer quarter, accounting for 94% of total production. The 20,000-plus car differential was attributed to a lack of (fairly priced) trailers to ship to customers when manufacturing ramped up at the conclusion of the quarter.
While the Shanghai plant closure curtailed output, others predict that demand in China has decreased owing to macroeconomic factors and the growth of local rivals such as Nio.
Worse, CEO Elon Musk’s on-again, off-again relationship with Twitter continues to distract investors. In yet another dramatic twist, Musk filed court filings that would push the $44 billion Twitter takeover ahead, following months of trying to back out. It’s even more aggressive pricing given that Tesla’s market worth is two-thirds of what it was at the start of the year.
Musk’s contentious Twitter poll over the Russia-Ukraine conflict heightened the tensions. Musk provided three possible pro-Russian outcomes for the war, infuriating Ukrainians and Americans and setting the tone for Tesla stocks (NASDAQ:TSLA) 15% one-week drop.
Is Tesla’s stock overpriced?
Tesla stock (NASDAQ:TSLA) price has dropped to its lowest level since the beginning of the epidemic. Is this making Tesla’s value more appealing?
The stock’s high P/E ratio has long been a source of worry for bearish. Although Tesla‘s growth trajectory has been spectacular, tweet-influenced retail traders have long bid Tesla “to the moon.” The selloff might be severe when a company is perfectly valued and anything goes wrong.
Tesla’s 200% profit increase in 2021 was unsustainable, but market frenzy priced the shares as if they were. With a relatively moderate 70% increase in profits predicted this year, the stock is trading at 58 times 2022 earnings. Based on next year’s earnings projections, the P/E ratio falls to 43x (compared to the S&P 500 at 15x the 2023 consensus earnings estimate).
Featured Image – Megapixl © Sergiomonti
Author Okoro Chinedu 
