Tesla (TSLA) shares were the weakest \performer in the consumer discretionary sector on Tuesday, falling to their lowest level since early November following reports that European sales in January were down 45%.
The EV manufacturer was one of the worst performing stocks in the S&P 500 (SPY) and Nasdaq 100 (QQQ), dragging each to critical tests of their own as investors are increasing their profit-taking and fear-based selling.
Shares of Tesla have now dropped 40% from their December highs as the stock finds urgent technical support at $300.
Headlines and reporting have sourced a significant drop in consumer demand for Tesla’s over the last month as would-be buyers appear to be holding back on their purchases in protest of Elon Musk’s involvement with the White House Administration.
Just two weeks ago, the state of California reported a significant drop in Tesla registrations.
In addition to the potential political fallout, Tesla and other auto manufacturers are now facing pressure as consumer sentiment is slumping in the new year.
Fresh economic data released Tuesday morning indicated a deterioration in consumer sentiment and investors braced for the potential impact of tighter U.S. trade curbs on Beijing.
The news follows Friday’s University of Michigan consumer sentiment numbers that also suggests that consumers are preparing for a resurfacing of higher prices.
At $300 a share, some investors are likely to think about “buying the dip” in Tesla stock.
On Monday, three Wall Street analysts released reports reiterating their buy recommendations on the stock along with current price targets. This is common to see happen on a stock like Tesla and normally helps to shore selling interest over the short-term.
That said, Tesla’s technical momentum suggests that the stock’s decline is likely to continue.
On February 20, Tesla’s 50-day moving average shifted into a bearish trend as the telltale trendline shifted into a declining pattern. The last time Tesla’s 50-day followed a similar trend was January 24, 2024. That shift in the stock’s momentum preceded a 22% decline in Tesla shares over two-month period.
Investors looking to add to Tesla positions would be wise to restraint themselves over the next week as the stock tries to hold support at $300. A move below that price will see selling interest in the stock increase dramatically as shares drive towards the $250 price target, another 18% decline from today’s price.
Shares of Tesla remain in a long-term bull market trend with a short-term bearish target of $250.
