Image Source: Pexels

What should you do now that Tesla Stock is Crashing?
 

Video Length: 00:01:06

If you follow me, Kiana, the Invest Diva, a former engineer here to help you beat the Wall Street bros at their own game, you probably know that I sold 14% of my Tesla shares close to the all-time high level back in December, not because I’m Nostradamus or have a magic time machine, but because I’ve been studying and investing in Tesla stock since 2015 and understand its psychology.

Yes, just like humans, every stock has unique characteristics, and Tesla’s patterns were predictable even before Elon Musk got involved in politics.

In my YouTube video published in December 2024 here, I covered Tesla stock fundamental analysis in detail and mentioned that Tesla stock was booming due to a ‘buy the rumor’ phenomenon as Trump had yet to take office but Wall Street bros were just excited about what could come next.

Tesla Stock Fundamental Analysis
 

In April 2024, Tesla made the surprising decision to slash the prices of its vehicles to a point where profitability was nearly erased.

This move left many investors puzzled, raising concerns about the company’s financial stability and future viability.

However, Tesla’s pricing strategy has put immense pressure on competitors, forcing them to lower their own electric vehicle (EV) prices, which could significantly impact their profit margins.

Unlike its rivals, Tesla possesses a key advantage – software. Its Full Self-Driving (FSD) package, priced at $10,000, represents pure profit, and additional over-the-air software updates could introduce a lucrative subscription model that other automakers lack the infrastructure to replicate.

Tesla has never been just a car manufacturer; it functions more like a technology company, with vehicles serving as a platform for software sales – similar to how Apple uses the iPhone to drive app and service revenue. In the future, Tesla could expand its offerings with an app-based ecosystem to further enhance recurring revenue.

Elon Musk’s leadership has played a crucial role in Tesla’s success, particularly in establishing the infrastructure necessary for EV adoption in the U.S.

However, his unpredictable nature and shifting priorities often create volatility for Tesla’s stock. His political affiliations have also influenced investor sentiment, with a recent surge in Tesla’s valuation coinciding with his support for Republican candidate Donald Trump.

Some speculate that this strategic alignment was aimed at persuading climate change skeptics to embrace EVs, demonstrating Musk’s unconventional but effective marketing tactics.

With a net worth surpassing $400 billion, Musk’s ability to navigate both technology and market dynamics continues to set him apart, reinforcing Tesla’s position as more than just an automaker.

Tesla Stock Technical Analysis
 

Now, let me show you what I mean by its unique characteristics when it comes to price action. Tesla has long been a cyclical/ growth stock.

This means the Tesla stock price typically moves upward for a year or so, finds a new high, and then ranges for a couple of years before finding a new high.

It then crashes to key psychological levels I identify using a magical tool called Fibonacci.

Based on this, if Tesla stock still matched my risk tolerance and moral values, I would buy it at these low prices and wait a couple of years to sell again as Elon Musk finds a way to get Wall Street bros excited again.

More By This Author: