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Tesla (NASDAQ:TSLA) stock has been falling all day even as the company prepares for an important event. Today’s decline is primarily driven by general market volatility.
Since the U.S. economy entered a bear market earlier this week, major indexes have been struggling. Today has been especially rough for the Nasdaq composite, which has fallen more than 3% since markets opened. This comes after the tech-heavy index attempted to rally yesterday but failed to gain sustainable momentum. Now tech players are falling across the board, though TSLA stock is among the day’s worst performers. As of this writing, it is down 7% for the day though it did attempt a slight rally in the past hour.
What’s Happening With TSLA Stock
It’s important to note that it isn’t just the Nasdaq that has spent this afternoon in decline. Both the Dow Jones Industrial Average and the broader S&P 500 have been trending downward all afternoon as the week’s market sell-off has resumed. CNBC reports that it began after Apple (NASDAQ:AAPL), a stock formerly known for outperforming in bear markets, had received an analyst downgrade. Since then, other high-growth tech names have faced an uphill battle, and TSLA stock is no exception. Another of the day’s top losers is Tesla competitor Rivian (NASDAQ:RIVN) which has fallen more than 8%.
Despite the general market volatility, Tesla has also received some bad news from Wall Street. Piper Sander analyst Alexander Potter recently downgraded TSLA stock, citing concerns about Tesla demand in international markets. “Recently, there has been an up-tick in client questions regarding Tesla ’s positioning in China,” he stated in a note to investors. Barron’s reported that while Potter doesn’t foresee any steep declines in demand statistics, he feels that “consensus delivery estimates for the third quarter are probably too high.”
It’s true that while new Tesla registrations have been increasing in China, concerns about demand have been rising as well. As Investor’s Business Daily also reported:
Local sales may still hit a record in September after Tesla approaching highs set in June. Tesla’s August numbers came after capacity increases to its Shanghai facility. But uncertainty remains about in China relative to increased Tesla production.
Potter maintains his “buy” rating for TSLA stock but it’s easy to see how these types of reports could worry some investors. The end of the year’s third quarter is approaching and if Tesla’s deliveries disappoint, it will send shares down. Although Tesla reached the mark set by analyst Dan Ives for its second quarter deliveries, they still fell short of Wall Street’s initial expectations. Potter likely factored this concern into his reevaluated TSLA stock price target.
What Comes Next
Are these reasons for TSLA stock investors to panic? Not at all.
Market conditions are volatile across almost every sector right now but Tesla has plenty to recommend it. Tomorrow is the company’s highly-anticipated AI Day 2022 and Elon Musk is expected to provide exciting product updates. Additionally, Tesla has the potential and power to perform well even if market conditions worsen due to its “dominant brand presence” as the electric vehicle (EV) market continues to boom. For patient investors, a market crash could present a rare buying opportunity.
When markets rebound, TSLA stock will be well positioned to keep growing. Days like this shouldn’t scare off investors who have stayed patient thus far.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the biedexmarkets.com.com Publishing Guidelines.