Spotting the Sweet Spot: When to Dive Into TSLA Stock for Maximum Gains

Unlock stock picks and a broker-level newsfeed that powers Wall Street.

David Moadel

Sun, Sep 10, 2023, 5:56 AM 4 min read

TSLA Stock Dives After a Huge Run-up

With a five-year monthly beta of 2.07, TSLA stock is volatile and prone to large price moves. In one example of this, the stock tumbled 5% on Sept. 1 after the financial press released some news items about Tesla.

We’ll talk about those news items in a moment. But first, let’s get some perspective. The Tesla share price had already rallied from $108 to $250 this year. So, the stock was vulnerable to a drawdown, and is still liable to pull back to a more reasonable price point (such as $200).

Regarding the 5% drop in TSLA stock, it happened after Tesla reportedly raised some of its EV prices in China while also lowering vehicle prices in the U.S. This may have prompted feelings of confusion and uncertainty among Tesla’s shareholders.

And if there’s one thing that financial traders can’t tolerate, it’s uncertainty. Tesla is facing heavy EV-market competition in the U.S. and China.

Without a doubt, some investors would like to see Tesla provide a specific action plan to stay ahead of the company’s rivals. Such an action plan hasn’t materialized yet, however.

Tesla’s Chief Executive Should Stick to One Strategy

One problem that investors have to deal with is Tesla CEO Elon Musk’s mercurial personality. Frankly, you just never know what he’s thinking or what he has in mind for Tesla.

For example, Tesla has an upgraded Model 3 that’s available in China and Europe. Yet, the automaker doesn’t have an upgraded Model 3 that’s available in the U.S. This is baffling, as the U.S. market would certainly welcome an upgrade of this vehicle model.

It’s odd that Tesla is making some of its EV models more affordable in the U.S. but less affordable in China. I searched high and low for Musk’s explanation for this dual pricing strategy, but couldn’t find anything.

In addition, Musk hasn’t been consistent regarding U.S. government EV incentives and subsidies. In December 2021, Musk called for the government to get rid of EV subsidies. Now, he’s apparently allowing Tesla to lower its U.S. vehicle prices in order to qualify for government incentives.

To quote Interactive Brokers (NASDAQ:IBKR) chief strategist Steve Sosnick, “Musk has allowed himself to be pulled in different directions, and it’s affected Tesla.” Thus, Sosnick asks, “[S]hould we be more concerned about Tesla’s present and near-term, rather than its long-term future?”

TSLA Stock: Choose a Buy Price and Stick to It

Again, I should emphasize that I still foresee Tesla growing in the coming years. Tesla’s brand loyalty and market presence are so strong that the company will probably succeed in the long term despite Musk’s eccentric personality.

On the other hand, Tesla’s investors need to be careful. The best move right now is actually to do nothing but wait.

TSLA stock could easily move lower, perhaps even to $200, before the year is over. I like $200 as a buy-up price, but you should pick your own price and then wait patiently. Then, it’s up to you to hit the “buy” button, if you can tolerate Musk’s unpredictable leadership style.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.