Tesla Inc. (TSLA) is trading lower today, falling over 3% as concerns over rising interest rates and inflationary pressures weigh on growth stocks.
The 10-year Treasury yield has climbed back to its highs, signaling persistent inflation heading into 2025. Tesla, like other auto companies, relies on consumer spending and access to affordable financing. A shift in macroeconomic conditions could present challenges to maintaining its aggressive growth trajectory.
Tesla has been a standout performer in 2024, with the stock surging nearly 50% year-to-date on the back of strong vehicle deliveries, improved margins, and continued expansion into new markets with the company's robotaxi product.
Shares of Tesla have benefitted significantly from the election results in November and Elon Musk's relationship with the President-elect.
Investors drove Tesla shares higher as the market is now speculating that Tesla's autonomous vehicles may benefit from fewer regulatory headwinds.
Today’s decline reflects broader market concerns about how higher rates and inflation may impact high-valuation stocks like Tesla, whose premium is heavily tied to future growth expectations.
The elevated 10-year yield points to a tougher environment for financing, which could potentially slow Tesla’s sales growth, particularly for its higher-priced models.
Additionally, inflationary pressures in 2025 may increase production costs, putting further strain on the company’s profit margins. While Tesla has demonstrated an ability to navigate supply chain disruptions and maintain profitability, these emerging headwinds highlight the need for caution from investors.
Despite today’s pullback, Tesla’s long-term outlook remains bullish.
The stock is trading well above its 20-month moving average, putting Tesla stock in a bull market trend.
Traders may look at Tesla's price a little differently.
The immediate focus should be on key technical levels, such as its 50-day moving average and the psychological $425 level, which could serve as pivotal support zones.
A break below these levels will increase selling pressure as traders move to take profits from Tesla's strong fourth quarter performance.
