The growth stock rally during March certainly played a role in Tesla’s (NASDAQ:TSLA) move back to four-digit prices. But company-related news played a major role in extending the momentum through early April. Thanks to the electric vehicle (EV) maker’s record delivery numbers in the first quarter, TSLA stock received another boost on April 4, closing the day at just under $1,150 per share.
However, shares have started to lose momentum. Chalk it up to both the market’s overall direction and news of production headwinds from Covid-19 restrictions in Shanghai. With these developments, Tesla shares are down slightly, yet remain above $1,000 per share. Even so, its slide could continue.
There’s been a spate of exciting news about the company lately. Besides the strong deliveries report, investors are excited about the opening of its gigafactory in Austin, Texas. On top of all this excitement, there’s elevated buzz around its CEO, Elon Musk. He recently purchased a stake in Twitter (NASDAQ:TWTR) and was added to its board, which has resulted in a big run-up in TWTR stock.
Still, after all this excitement, things are bound to cool. With the big run-up, many are going to take profit. And with the market getting concerned again about the Federal Reserve’s rate hike plans, there’s a lot that could drive a considerable pullback for TSLA stock.
Admittedly though, one factor is a bit of a wild card. That would be the company’s upcoming earnings report, set to release after the market closes on April 20.
On one hand, given its delivery numbers, Tesla is likely to report strong results. In theory, this could help the stock get back its momentum. On the other hand, a negative guidance update could outweigh the positives. Shares could drop post-earnings, like they did following the release in January.
Even if it does see a post-earnings pop, this could be a short-lived boost. With the specter of tighter monetary policy once again top of mind, investors may opt to sell into strength as opposed to buying on the rumor, then buying more on the news.
While it still appears unsinkable, there’s no guarantee TSLA shares will regain their recently-lost momentum. Over a longer timeframe, if its growth doesn’t experience a considerable slowdown, the stock may be able to sustain and grow its valuation.
But over a shorter time frame, like between now and year’s end, it’s going to be difficult for TSLA stock to surge again as growth stocks start to fall out of favor again. It’ll be even more of a challenge for it to hit its past high or new highs. Keep this in mind if you’re mulling buying the dip today.
On the date of publication, Thomas Niel 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.
