The share price of the world’s most valuable automaker TESLA (NASDAQ: TSLA) crashed by more than 68% in 2022 and In December alone, the stock dropped almost 40%. The recent crazy fall has put investors into a dilemma over whether they should buy the stock.
Tesla has witnessed nearly 70% of its market cap being erased in 2022. Elon Musk became the first man in history to lose 200 billion dollars of his net worth due to a sharp decline in the net value of Tesla’s shares. While the stock slightly regained momentum in the final days of 2022 lifted by the positive comments from Elon Musk, the CEO of Tesla and Twitter.
"Don't be too bothered by stock market craziness. As we demonstrate continued excellent performance, the market will recognize that," – Elon Musk said.
Why is TESLA stock plummeting?
2022 was the worst year for stocks since the Great Recession. The plunge in technology, entertainment, and auto sector stocks this year was sparked by soaring inflation that prompted an aggressive response from the Federal Reserve.
A variety of other events have occurred throughout the year, dragging Tesla’s stock down. Elon Musk's takeover of Twitter has likely had a significant impact on the company’s stock. Musk has also sold a majority of its shares to cover his purchase of Twitter. One of the other reasons was China's strict COVID-19 policies which caused the company to reduce production at its Shanghai factory. China is the highest EV market for Tesla.
How can the TESLA find a way to rise again?
It is impossible to definitively say that Tesla stock will recover. Tesla’s outlook is clearly not as gloomy as the market expects. Tesla delivered more vehicles in the fourth quarter than a year ago, but less than experts expected. The carmaker delivered more than 1.3 million cars of all models in 2022, an increase of 40% from the previous year. In the fourth quarter alone, the company delivered more than 405,278 vehicles and produced over 439,000 vehicles during the quarter. Tesla will announce its quarterly earnings for the fourth quarter on January 25. If results expectations are surpassed, we could expect the stock will regain some upside momentum.
On the negative side, If the overall stock market sentiment is down over the next several months Tesla stock could drop further as its growth slows down even more. On the other hand, if Elon Musk sells more Tesla shares in future, then definitely it will impact the stock price in the short term.
$TSLA technical review
The below weekly chart of Tesla shows how aggressive the decline has been in 2022. In the short term, if the stock breaks above the $130 price mark bring a new potential barrier into the picture. A break this and close above this level then expect the stock to zoom up to $150 and $165. To the downside, bearish actions could send the price to test the 52-week low of $108. Sliding beneath that floor, $103/100 may come under examination. A break below this area could then open the door to $93/90.
Long-term investors looking to get involved in the stock might prefer to wait for some confirmation that the price is starting to reverse and watch for a weekly close above the $180/200 area.
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