Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Tesla: Buy Or Sell The Stock After A 27% Plunge From Its Record High?

By (Haris Anwar/ MarketsMar 22, 2021 07:38
Tesla: Buy Or Sell The Stock After A 27% Plunge From Its Record High?
By (Haris Anwar/   |  Mar 22, 2021 07:38
Saved. See Saved Items.
This article has already been saved in your Saved Items

Now is a good time for long-term investors to take a hard look at their growth portfolios. Many high-flying tech stocks, after an incredible run last year, are currently struggling as investors favor cyclical companies whose shares have more upside as the prospects for reopening the economy grow brighter.

Among growth stocks, Tesla (NASDAQ:TSLA) is one of the most-watched names. Fueled by increasing demand for its electric cars, improving profitability, and the success of its operations in China, shares of the Palo Alto, California-based auto manufacturer gained more than 740% last year, making it the best performer on the S&P 500.

Elon Musk, its founder and chief executive officer, became the richest person in the world in January, before Amazon's (NASDAQ:AMZN) Jeff Bezos reclaimed the title.


But so far this year, the performance of TSLA hasn't been impressive. The stock is down more than 7%. Perhaps worse, if someone bought this name on Jan. 26, when the stock was at its peak, closing at $883.09, the year-to-date losses are close to 30%.

Nevertheless, the stock has a history of boom-and-bust cycles. If you’re a buy-and-hold investor, chances are you’re still seeing quite a bit of profit on your position. During the past five years, Tesla stock is up more than 1300%. It closed on Friday at $654.87.

Even after this brief bearish spell, some of Tesla’s most bullish analysts remain loyal. They continue to see strong gains ahead in coming years.

$3-Trillion Company

Among those who favor Tesla shares is Cathie Wood, whose ARL Invest Management holds a large stake in Tesla. According to the fund’s latest note, TSLA could hit $3,000 by 2025, which would give the company a valuation of almost $3 trillion.

There’s a 50% chance of Tesla achieving fully autonomous driving within five years, which could allow the company to scale its planned robotaxi service quickly, according to a note posted Friday on ARK’s website. ARK is also bullish on Tesla’s insurance business which collects highly detailed driving data. The unit could expand its offerings in other regions, benefiting the company from its better-than-average margins.

Of course, it's anybody's guess if Tesla stock will reach that level. But the general market consensus is that this is not a good time to buy Tesla shares. On Friday, a report surfaced that regulators in China plan to ban Tesla vehicles from military installations and housing compounds on concerns that the vehicles' on board cameras could be used to collect sensitive data for the company.

As well, Tesla is the least appreciated stock among the group of mega cap growth stocks, said a recent post on, including Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT), with only 38% approval on Wall Street. And when it comes to a price target, analysts are projecting an average loss of 14% on Tesla stock.

Along with this bearish tone, there are also growing concerns that the EV market won’t be as easy a ride for Tesla as many of the stock's bulls believe. Traditional automakers, like Volkswagen (DE:VOWG_p) AG (OTC:VWAGY) and General Motors (NYSE:GM) are accelerating their EV efforts.

VW’s stock received a major boost this month as some analysts turned bullish on electric vehicle ambitions. UBS Group analysts in a recent note praised VW's first mass-market model built off a dedicated EV platform, the ID.3 hatchback. The car is “the most credible EV effort by any legacy auto company so far,” wrote Patrick Hummel, who raised his price target on the shares.

Bottom Line

There are many factors tarnishing some of the shine of Tesla stock after a standout year. The continuation of such a powerful run is highly unlikely when investors are shunning growth stocks in favor of cyclicals.

In addition, with competition heating up in the EV market, we'd urge caution. We believe there will be a better entry point in the days ahead for those who want to play the Tesla trade and hold this stock in their long-term portfolios.

Tesla: Buy Or Sell The Stock After A 27% Plunge From Its Record High?

Is Apple Undervalued?

Based on 15 different premium valuation models, we calculate whether Apple stock is undervalued or overvalued every day. If you are considering Apple for your portfolio, you need to check this out:

See Fair Value Now
Unlock Apple's unbiased fair value with InvestingPro+

Related Articles

Tesla: Buy Or Sell The Stock After A 27% Plunge From Its Record High?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Pedro Gonzalez
Pedro Gonzalez Mar 22, 2021 20:04
Saved. See Saved Items.
This comment has already been saved in your Saved Items
short via buying STLA inverse 1X
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Our Apps
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
  • Sign up for FREE and get:
  • Real-Time Alerts
  • Advanced Portfolio Features
  • Personalized Charts
  • Fully-Synced App
Continue with Google
Sign up with Email