Why Is Tesla (TSLA) Stock Down Today?

Tesla (NASDAQ:TSLA) stock closed down today amid a major market selloff.

Tesla (TSLA) Motors store in Piazza Gae Aulenti square in Milan, Italy
Source: Zigres / Shutterstock.com

Yesterday, Wall Street braced for the worst as a looming Federal Reserve rate hike threatened to push stocks down. Even after the confirmation of another 50-basis-points rate hike, though, high-growth stocks rallied.

Today many of the names that were in the green yesterday, TSLA included, have slipped back into the red as investors rush to offload shares.

After yesterday’s rally, TSLA stock spent today in gradual decline, ultimately closing down more than 8%.

Why It Matters for TSLA Stock

TSLA stock has had a difficult day, but it is by no means alone. The Dow Jones Industrial Average lost more than 1,000 points and closed down 3%. The Nasdaq Composite shed more than 600 points and fell by 5%. And several of yesterday’s winners, including Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), have all spent today falling.

As the Washington Post reports, “Risk-averse investors backed off cryptocurrencies. Bitcoin and Ethereum each fell more than 7 percent. Traders looking for safer bets pushed up the 10-year Treasury note by 3 percent.”

All told, today’s massive declines are unsurprising give the Fed action. As InvestorPlace analyst Luke Lango noted during the year’s first hike, increased interest rates can lead to significant market rebounds, netting substantial returns for patient investors.

Tesla is just another victim of the negative momentum trend that has overtaken markets. While today’s performance isn’t encouraging, the company has recently announced expansion efforts in both Shanghai and Berlin. It is working overtime to make up for Shanghai factory shutdowns and has already returned to 80% of its previous production capacity. Now it is looking to purchase land adjacent to Gigafactory Berlin in hopes of building a railroad there to streamline shipping efficiency.

All signs point to smoother roads ahead for TSLA stock, even in the face of rate hikes.

What Comes Next for Tesla

On days like this, it is important to remember the power of broad market forces. When fear takes over and a selloff accelerates, it is very difficult for companies to thrive. However, with multiple catalysts for Tesla on the horizon, shares are likely to rise even further after markets adjust again.

It has been a difficult year so far, but investors have learned one thing: Nothing can keep TSLA stock down for long.

On the date of publication, Samuel O’Brient did not hold (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.


Article printed from InvestorPlace Media, https://investorplace.com/2022/05/why-is-tesla-tsla-stock-down-today/.

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