The Decline in Momentum of the Tesla Shares' Ascent Today
Tesla (TSLA dropping 5.33%) shares have been climbing since the U.S. election in early November. However, as the trading week concludes, the stock is on course for its second straight losing day.
As of 12:35 p.m. ET on Friday, Tesla shares had fallen by 4.3%. Yet, they've surged by an impressive 70% over the past three months. A significant portion of this gain occurred after Tesla CEO Elon Musk backed Donald Trump in the U.S. presidential election.
Tesla requires a record-breaking fourth quarter
The uptick in sales is slowing down as we approach the year's end. Investors are starting to realize that the company might not meet its 2023 electric vehicle (EV) delivery targets. Tesla needs to ship approximately 515,000 EVs in the fourth quarter to match the 1.8 million units shipped in 2023.
Typically, companies push to ship products towards the end of the year. Tesla's record quarterly delivery was close to 485,000 vehicles in the fourth quarter of the previous year. Analysts, however, predict that the company might fall short of its target this year, estimating 510,000 unit sales.
After such a substantial price surge in recent months, a failure to meet fourth-quarter delivery targets is likely to push the stock down. Some investors are even betting on this outcome, anticipating a drop when Tesla releases its fourth-quarter production and delivery figures next week.
A potential bright spot could be Tesla's sales in China. Reports suggest that the fourth quarter is looking promising for Tesla's China sales, with around 22,000 EVs sold during the first week of this month. This would be the strongest week of the fourth quarter.
Savvy investors shouldn't be overly concerned about short-term data, though. Much of the recent rally in Tesla stock came from expectations that its autonomous driving technology is edging closer to implementation, with the White House possibly easing regulatory obstacles for Musk and his team. If Tesla can offer cutting-edge self-driving software to customers, it could generate substantial revenue for the company. Investors who believe that's imminent should consider buying the dip.
In light of potential challenges in meeting its delivery targets, some investors are cautiously selling Tesla shares, viewing a potential drop as an opportunity for investment. With the White House potentially easing regulatory obstacles for Tesla's autonomous driving technology, investors who believe in its imminent implementation might consider purchasing the stock at lower prices.
