Tesla Is Down By 5%, Here Is Why

Key Insights

• Tesla’s Gigafactory in Shanghai stays closed amid lockdown. 
• Recent hawkish comments from the Fed have put pressure on tech stocks, including Tesla. 
• Tesla stock will remain sensitive to general risk appetite in the near term. 

Tesla Stock Falls As Shanghai Factory Remains Shut Due To Lockdown

Shares of Tesla found themselves under pressure after it became evident that its Shanghai factory would not be restarted at least until this Friday due to coronavirus restrictions in the city.

China has committed to a zero-COVID policy and implemented aggressive lockdowns during the pandemic. Currently, it is dealing with a significant wave of coronavirus, and the whole city of Shanghai is in a lockdown.

It is not clear whether this lockdown would be lifted in the upcoming days and whether Tesla’s Gigafactory will be able to get back to work this week.

What’s Next For Tesla Stock?

The news from Shanghai have certainly put some pressure on Tesla stock as each day of the lockdown will lead to lost production. However, it looks that traders use the news as an excuse to take some profits off the table after the huge rally, which took the stock from the $750 level to the $1150 level.

As usual, Tesla remains a very expensive stock, and its dynamics are closely correlated to general risk appetite. Tech stocks have found themselves under pressure in recent trading sessions as Treasury yields tested new highs after hawkish comments from the Fed.

It remains to be seen whether traders will be ready to push Tesla stock closer to the all-time highs near $1250 if Treasury yields continue to move higher while commodity prices stay close to current levels.

At the same time, it should be noted that analyst estimates continue to move higher, which is bullish for Tesla stock.

For a look at all of today’s economic events, check out our economic calendar.