Tesla stock (NASDAQ:TSLA) had another decline of 2.9% on Tuesday, finishing at $216.50. This was in contrast to the S&P 500 (which finished down 0.7%) and the Nasdaq Composite (which finished down 1.1%). Since September 28, when the firm announced third-quarter delivery statistics that were lower than anticipated, the stock price has dropped a staggering 25%.
Tesla, the market leader in electric vehicles, has seen its share price go through a tough patch. The bulls have been suffering a lot because of it, but there is a chance that they could soon receive some respite.
Tesla Stock Price Prediction
Recent reports from Barron’s have speculated that Tesla stock (NASDAQ:TSLA) might reach $200 per share. That was determined by taking into account the findings of others on the technical stock market. There is still a chance that shares may reach that target; they are currently near it. However, another technical observation suggests that some of the selling pressure may begin to ease.
The price of Tesla shares has dropped to an extreme low. Traders use this word, which has mathematical underpinnings, to describe the momentum in the price of any stock. When things have reached an oversold position, they have deteriorated quite rapidly. When this occurs, negative information is reflected in the stock price. Because there is no one left to sell, shares are often ripe for a rebound because there is no one remaining to sell them.
That is one reason to have a positive outlook. History is another factor to consider. Bespoke Investment Group examined previous periods during which Tesla stock experienced declines of more than 20% over a single week. It detected 23 cases since 2010 and concluded that large drops laid the stage for significant increases in the future.
After a sudden loss of more than 20%, the price of Tesla stock normally recovers by around 37%, 84%, and 238% during the subsequent month, three months, and six months, respectively.
According to a report published by Bespoke on Monday, the company stated, “The performance numbers…are fantastic. With them, we would highlight the usual caution that previous success is no guarantee of future outcomes.” In addition, “given its market value, the law of big numbers would make it almost difficult for [Tesla] to record returns equivalent to those achieved in the past.” These returns include profit margins on investments.
Tesla is already too large to see an increase of almost 240% during the next six months. In that case, Tesla would have a market capitalization of around $2.3 trillion, which would be on par with that of Apple, the publicly listed company with the highest value.
These are only a few pieces of historical and technical information that bulls should consider. There is no assurance about what will occur shortly for any company, let alone one that is as volatile as Tesla’s price. This is something that Bespoke correctly points out.
When Tesla publishes its profits for the third quarter on October 19, it will be a significant forthcoming event for both the company and the market.
Featured Image – Megapixl © Sergiomonti
Author Valerie Remorosa