Why It May Be Time To Buy Tesla Stock

TSLA: Tesla logo

Tesla (NASDAQ:TSLA) stock has declined by roughly 19% over the past month (21 trading days). There are multiple factors weighing on the stock. Firstly, Tesla continues to be weighed down by CEO Elon Musk’s recent acquisition of the social media app Twitter.  Although Mr. Musk purchased the social media company in his individual capacity, he offloaded Tesla shares to fund the purchase and free up liquidity to manage the loss-making social media company, which has a massive debt load. In early November, he sold another 19.5 million Tesla shares, per an SEC filing, in a transaction worth $3.95 billion. The Twitter acquisition might also be seen as an unwanted distraction for Mr. Musk, forcing him to take time away from his role at Tesla. Separately, there are also concerns that Tesla’s growth could cool off amid a broader economic slowdown, particularly in markets like China. Tesla cut prices of its Model 3 and Model Y cars by as much as 9% in China in October and  Chinese tech media Huxiu reports that another price cut could be around the corner.

However, now that Tesla stock has seen a decline of about 19% over the last month, will it continue its downward trajectory in the near term, or is a recovery imminent? Going by historical performance, there is a 69% chance of a rise in TSLA stock over the next monthOut of 130 instances in the last ten years that Tesla stock saw a twenty-one-day decline of 19% or more, 90 of them resulted in the stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 90 out of 130, or a 69% chance of a rise in TSLA stock over the coming month, implying a positive near-term outlook for the stock. See our analysis on  Tesla Stock Chance of A Rise for more details.

Calculation of ‘Event Probability’ and ‘Chance of Rise’ using the last ten years’ data

  • After moving 1.5% or more over five days, the stock rose in the next five days on 58% of the occasions.
  • After moving -6.7% or more over ten days, the stock rose in the next ten days on 56% of the occasions
  • After moving -19% or more over a twenty-one-day period, the stock rose in the next twenty-one days on 69% of the occasions.
Relevant Articles
  1. Will Tesla’s Booming Energy Storage Business Help Its Stock?
  2. Will Cybertruck Launch Drive The Next Leg Of Tesla Stock’s Rally?
  3. Does Tesla’s Move To License FSD Make The Stock More Attractive?
  4. What To Expect From Tesla’s Q2 Results?
  5. Tesla’s Delivery Growth Surpasses Estimates. What Does This Mean For The Stock
  6. Margins In Focus As Tesla Reports Q1 Earnings

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

 Returns Nov 2022
MTD [1]
YTD [1]
Total [2]
 TSLA Return -20% -48% 1184%
 S&P 500 Return 4% -16% 80%
 Trefis Multi-Strategy Portfolio 4% -19% 221%

[1] Month-to-date and year-to-date as of 11/26/2022
[2] Cumulative total returns since the end of 2016

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