Why Tesla Stock Is Trying To Settle Below $1,000

Tesla Shares Keep Moving Lower As Traders Stay Focused On Musk’s Stock Sales

Shares of Tesla are down by more than 4% at the start of today’s trading session as traders remain focused on Musk’s share sales.

Tesla’s CEO Elon Musk has already sold $6.9 billion worth of Tesla shares after a Twitter poll indicated that users wanted him to sell a 10% stake in the company. While Musk was expected to start selling his stock to deal with taxes related to stock options, the timing (and the form of the announcement) surprised the market.

For some traders, Musk’s Twitter poll looked like a decision to take some profits off the table after a huge rally in Tesla shares which took them from the $550 level in May to the highs near $1240.

What’s Next For Tesla Stock?

Tesla stock has already pulled back by about 20%, but it remains to be seen whether speculative traders will be ready to buy shares of the EV maker as Musk’s stock sales remain a problem.

Analyst estimates continued to move higher in recent weeks. Currently, analysts expect that Tesla will report earnings of $6.05 per share in 2021 and $8.08 per share in 2022, so the stock is trading at 124 forward P/E.

The recent IPO of Rivian Automotive highlighted demand for electric vehicle companies, and it does not look that Tesla’s rich valuation is a big problem in the current market environment.

However, the near-term dynamics of Tesla stock will depend on market mood and general risk appetite. Currently, the market is bearish due to Musk’s stock sales, and the company will need to come up with additional catalysts to change the trend of its stock.

It should be noted that the pullback from recent highs was very fast, and it looks that some traders who were willing to take profits off the table were not prepared for the move. These traders may create additional selling pressure in the upcoming trading sessions, although support for Tesla stock should gradually grow as speculative traders take another look at the company’s shares after a 20% pullback.

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