As the US stock market has a bit of a jitter, the Tesla (NASDAQ:TSLA) share price is also having a bad run. Tesla shares are down 9% this week alone and are just a couple of bucks away from posting fresh 52-week lows. With a lot of people talking about the stock right now, should I get involved?
Short-term angst
I can put the fall over the past couple of months down to a few reasons. Earlier in the month, the business released a Q1 delivery update. It showed that for the period in question, the firm managed to deliver 386,810 vehicles. This was a large miss — the anticipated figure was 450,000.
Hence, the share price took a nosedive given the implications this has for customer demand. Further, it could be a negative precursor for the financial results, which are due to come out later this month.
Another factor has been general market unease. After starting the year off in hitting all-time highs, the Nasdaq 100 and the S&P 500 have both slumped recently. This has been put down to the fact that investors now expect interest rates to stay higher for longer. This is a negative for stocks in general, as it makes debt more expensive and puts more pressure on consumers. Tesla hasn’t managed to escape this pessimism.
The bigger picture
Despite the bad news, I need to take a step back. Tesla shares are down 15% over the past year, including the fall this week. So we’re not talking about a stock that has halved in value or anything crazy.
Let’s also remember that the shares have always been volatile. One factor that influences this is the number of speculators who actively trade Tesla stock. This means that in the short term, sharp swings can be seen.
Fundamentally, the business is doing well. The miss in deliveries wasn’t great, but it’s not the end of the world. In comparison to the 386k deliveries in Q1 2024, the same figure in 2023 was 422k. In 2022 it was 310k and 2021 it was 185k. So when I take a longer-term view, I can see that Tesla has been ramping up performance over the past few years.
The future is green
Perhaps the biggest reason why I’m thinking about buying Tesla shares at the moment is that electric vehicles (EV) are the future. Given the tightening regulations on emissions and the push by Governments to go green, Tesla has a great runway to grow in the years to come.
I’m seriously considering buying the stock on this current dip. I’m going to wait and see how the quarterly results come out next week and go from there. I think other investors should put the stock on their watchlist to do the same.
