Tesla stock was trading around the $110 level on Tuesday after a drop of over 11%.
Quiet holiday markets could be partly to blame for the significant losses in Tesla. Still, the EV sector was hit across the board.
TSLA – Weekly Chart
The price of Tesla is setting up a worrying bearish close to the year, and the $130 level has given way. That could see the stock move lower into 2023.
Shares of the EV maker slid by over 11% on Tuesday after reports of a production pause in Shanghai. The lows below $110 are the lowest level for the stock since August 2020. On a year-to-date basis, Tesla trades over 70% lower than its January 1 open.
Further pressure on the EV sector came from a weak delivery outlook for Chinese rival Nio Inc, which hints at more problems for demand in the country. Shares of the Chinese EV maker also dropped 8.48% on Tuesday, with Li Auto -1.78% and Xpeng -2.28% faring better. The drop in EV stocks also ignored a joyous day for the market after China was set to drop quarantine for visitors in January. However, traders are still waiting to see a material change in consumer demand during the first half of 2023.
The week started badly for Tesla with a downgrade from Oppenheimer. Analysts downgrade Tesla to Perform with no price target. The brokerage also wrote that Twitter will likely distract Elon Musk enough to cause further damage to Tesla. The firm noted, “We believe increasing negative sentiment on Twitter could linger long term, limiting its financial performance and becoming an ongoing overhang on TSLA.”
With only a few trading days before the end of the year, Tesla will be on the back foot in the New Year.
