Advertisement
Advertisement

Why Tesla Stock Is Down By 4% Today

By:
Vladimir Zernov
Published: Dec 6, 2021, 16:26 UTC

The stock is trying to settle below $975.

Tesla Model S electric car zero emissions

In this article:

Tesla Stock Falls On Reports About SEC Probe

Shares of Tesla found themselves under pressure after reports indicated that SEC was investigating a whistleblower complaint over the company’s disclosure of risks associated with solar panel system problems.

It remains to be seen whether this SEC probe will serve as a material catalyst for Tesla stock in the longer-term. The company also faced scrutiny after incidents with its driver assistance systems, but these problems had no impact on the stock in the longer-term.

It should be noted that trading in tech shares is very nervous today, and big tech stocks move back and forth. It looks that the market is worried about tapering and higher rates in 2022, so traders question whether current valuation levels will be appropriate for the higher interest rate environment.

What’s Next For Tesla Stock?

While Tesla stock has been moving back and forth in recent weeks, analyst estimates continued to move higher. Currently, the company is expected to report earnings of $6.06 per share in 2021 and $8.17 per share in 2022, so the stock is trading at 119 forward P/E.

At such valuation levels, Tesla stock will remain sensitive to general risk appetite in the high-growth segment of the market. Several pandemic-era leaders like Zoom, DocuSign and Peloton have already been hit hard when the companies did not meet market’s expectations.

The performance of the growth-focused ARK Innovation ETF, in which Tesla is the largest holding, has been disappointing this year, which shows that the market has started to question whether high valuations are justified.

Tesla is much bigger than Zoom or DocuSign. However, it will be hard for Tesla stock to trade above 100 forward P/E in case the sell-off in growth stocks continues and investors rush out of related ETFs, which have a material impact on stock prices nowadays.

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

About the Author

Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets. He is a specialist in stocks, futures, Forex, indices, and commodities areas using long-term positional trading and swing trading.

Did you find this article useful?

Advertisement