Why Tesla Stock Rebounds After Yesterday’s Strong Sell-Off
According to recent reports, Tesla’s orders in China declined to 9,800 in May from about 18,000 in April. Tesla has recently faced some pressure due to quality issues, recalls and a PR crisis which was triggered by a problem with the cusomer who stated that she had a brake failure in her Tesla car.
China is a very important market for every electric vehicle car maker that plans to grow fast, so Tesla’s problems in China may ultimately put material pressure on the stock if the recent rumors get confirmed by the official data from Tesla.
What’s Next For Tesla Stock?
Today’s trading action shows that Tesla stock remains dependent on general market sentiment towards high-growth tech stocks.
Today, Treasury yields declined and tech stocks got a boost after the release of weak U.S. Non Farm Payrolls report. The positive impact of lower yields was sufficient enough to offset a disturbing report about the company’s sales in China and the recent sell-off in Bitcoin which was triggered by Musk’s tweets.
Currently, analysts expect that Tesla will report earnings of $4.54 per share in 2021 and $6.23 per share in 2022, so the stock is trading at roughly 95 forward P/E for 2022.
At such valuation levels, general market sentiment towards risky assets remains the main driver for near-term movements of Tesla shares in absence of big news from the company.
However, traders should keep an eye on the recent developments in China as they may ultimately have a notable impact on Tesla’s financial performance. While this is not the first time a Western company faces a PR crisis in China, and big brands have previously managed to sort things out, current problems come at a time when competition is getting more intense.
For a look at all of today’s economic events, check out our economic calendar.