Recently, Tesla stock has not been doing so well. Those buying stocks in Tesla have been pulling back. After a new vehicle release, they saw the stock tumble down considerably. It experienced a shocking 5% drop over a single day this last Friday. The stock’s performance is especially poor considering the positive performance in the S&P 500 and the flat Nasdaq movement. The new hardware release may not be the issue, however. The true issue may lie with the software.
Most analysts believed this drop was due to the newer Model 3’s recent launch in European and Chinese markets. The Model has been doing well since its initial release in 2017, and this new release could have been a good boost to the Tesla stock. However, the performance was not so good. Investors’ expectations were likely high due to a continued increase in the stock’s value over the last two weeks. In fact, it increased by 18%. Such analysts believed that investors felt disappointed because this new Model 3 was too similar to the original. So, the reason why Tesla’s stock is down may be due to higher expectations. The main new features are an update in the interior and greater driving distance on the battery.
What Else Could Be Affecting the Tesla Stock?
There could be an alternative explanation, however. During the release of this new Model 3, other changes were taking place in the background. Tesla has been discounting the price of its driving assistance software (FSD). It recently brought it down from $15,000 to $12,000. This is Tesla’s software that the Tesla CEO wants to eventually lead to fully self-driving cars. As it currently stands, they have not developed it fully. Drivers often have to pay attention to their cars even with this software on. Buying stocks in Tesla will likely remain low right now.
This could indicate that the company or the market lacks confidence in this product. Markets did not originally expect such a move. So is Tesla a good stock to buy for now? Only the coming weeks will tell.
