Do you want to be a beginner or a professional? Beginners get shaken out of perfectly good stock positions with each and every headline. Meanwhile, professional investors know that Tesla (NASDAQ:TSLA) is a leader among electric vehicle manufacturers. They stand by their investments, and I encourage you to buy and hold TSLA stock when it dips even if the headlines are sometimes scary.
EV stocks and technology stocks had a rough start to 2024. Tesla stock was no exception, but that’s not necessarily bad news. If anything, it’s just an opportunity to decide for yourself whether it’s time to add to your Tesla share stake. Most times, the headline risk surrounding Tesla is overblown and big-picture thinkers end up winning practically every time.
What’s Dragging TSLA Stock Down?
From a technical standpoint, it’s very interesting that TSLA stock’s 52-week high is $299.29. Is there some mysterious force that’s preventing the stock from breaking above $300?
There’s no need to get into conspiracy theories when the negative pressure on Tesla stock can be explained. Technology stocks fell in early 2024, so that’s one contributing factor.
Tesla’s trailing price-to-earnings ratio probably needed to come down from its high level. Tesla’s GAAP trailing P/E ratio was around 73x in mid-January, so it wouldn’t be too shocking if Tesla stock dipped for a little while longer.
There were also scary headlines to shake out beginner stock traders. Here’s a sampling of the negative news items:
- CEO Elon Musk warns that Tesla’s Cybertruck won’t be profitable until 2025
- Tesla’s China EV deliveries disappoint Wall Street
- Tesla recalls 1.6 million vehicles in China
- Tesla has trouble manufacturing enough batteries for its Cybertrucks
- Tesla adjusts the range of its Model Y vehicle lower
- Chinese automaker BYD (OTCMKTS:BYDDY) surpasses Tesla as the world’s best-selling EV manufacturer
Get Used to Volatility With Tesla Stock
That list doesn’t even include the controversial things that Musk says and does. There’s an overarching theme here: assume that volatility is par for the course if you’re going to buy and hold Tesla stock.
Now, I can add two more items to the list of things to worry about. First, Tesla reduced the prices of its vehicles in China again. Specifically, the automaker lowered the prices of its Model Y and Model 3 vehicles in China by 3% to 6%.
Like the other items on the “things to worry about” list, I don’t consider Tesla’s latest round of price cuts to be a deal-breaker. Tesla is doing what’s necessary to be competitive in China. None of this negates the fact that Tesla reached its EV-delivery target and beat Wall Street’s delivery estimate in the company’s most recently reported quarter.
Finally, I’ll give you one more scary headline: Tesla halted EV production at its German factory because of supply-chain disruptions in the Red Sea. This, like many other of Tesla’s issues, is temporary and probably won’t substantially alter the company’s long-term growth story.
Buy TSLA Stock When It Dips, and Even When It Doesn’t
It’s important to be aware of these news stories. You don’t have to let them scare you out of a perfectly good investment. Remember, there were plenty of off-putting headlines pertaining to Tesla in 2023, but Tesla stock still went up sharply.
It makes sense to hold a core position in TSLA stock and then add to that position if the share price drops 5%, 10% or more. That’s a sensible strategy if you believe that Tesla will continue to produce and deliver plenty of EVs.
So, don’t obsess over the headlines too much, and try to adopt the mindset of a professional instead of a beginner. And when it’s falling – or even when it’s not falling – consider adding some shares of Tesla stock in your long-term holdings.
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.
