Wall Street’s bargain hunting and upbeat news has not been enough for Tuesday’s larger session to turn the tide green. Tesla (NASDAQ.TSLA) fell along with the rest of the market, with TSLA stock falling almost 7% over the course of the day.
Although TSLA stock continues to slide and has proved to be a difficult investment for 2022, things are looking up for Tesla shareholders. Today, let’s examine some of the advantages and disadvantages of Tesla stock. We’ll also discuss how Tesla stock can be a strategic long-term investment. Tesla CEO Elon Musk is not in the spotlight anymore, for once in a while. There is still a lot of bearish business to be done.
Bears in The Driver’s Chair in TSLA stock
Tesla has suffered more from Covid-19’s impacts than others. Tesla’s Shanghai Gigafactory for EVs was temporarily closed in April. Tesla’s continued difficulties in obtaining critical nickel, or simply ever-more costly materials like lithium, have caused rising production costs and raised the risk of Tesla not meeting its vehicle forecasts.
Then there are the tabloid-style but clearly impactful headaches resulting from TSLA stock’s direct or indirect mention of Musk.
TSLA stock has suffered from Elon’s bid for Twitter (NYSE:TWTR), his favorite platform, in April. To prepare for the deal, the billionaire has already sold approximately $8.5 billion of TSLA stock. The takeover will be collateralized by Elon’s TSLA stockholdings, which could make it more complicated.
Tesla investors are also questioning this acquisition as they worry that Musk will lose focus on the EV markets crown jewel. And that could lead to TSLA stock being sold.
Last but not least, there are claims of a $250,000 settlement in relation to sexual misconduct allegations with an attendant aboard a SpaceX corporate plane in 2016. The Tesla CEO called the claims “utterly absurd.”
Why Bulls Should Invest in TSLA Stock
Tesla’s current state of affairs is fraught with uncertainties. TSLA stock concerns are mainly hearsay, until it is proven otherwise.
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Despite some headline-grabbing innuendos to the contrary, Tesla’s Shanghai Gigafactory is now back at 1,000 EV production levels. This was before April’s shutdown. Tesla’s executives also believe it is possible to build 2,600 vehicles per hour, which allows them to achieve their goal of producing 1.5 million EVs.
According to The Motley Fool’s calculations, Tesla’s 50% growth in vehicle deliveries and its huge profit margins make it less expensive for shares than 50 times this years’ earnings. TSLA stock makes a great choice for investors looking to invest in growth at a reasonable valuation.
Investors also won’t have an argument from a Tesla price list that looks cheap.
Shares are currently in a downtrend after their February Covid-based rally. The stock was trading at a cup-shaped bottom and has recently experienced a double-bottom pattern with 50% retracement. This is a huge advantage for a contrarian and value-driven TSLA stock.
How to buy TSLA stock smartly
To be fair, buying TSLA stock now could look wildly premature given the risk-averse nature of the wider market. Back-up-the trucks conditions could be offered to buyers at a price of approximately $350-$500 per share as we move into the dog days of summer.
However, before I purchase Tesla, I’d like to see one of these things happen.
First and foremost, fingers crossed that Wall Street gets sufficiently rattled as to offer a shipment of TSLA stock at a price closer to $500. An investor could make their first purchase, and then be less meticulous in pinpointing the bottom.
Alternativly, a weekly top candlestick, which is backed up by an improving stochastics indicator, would make sense at this moment.
You can choose to own Tesla or not. If you do, be sure to have some options as a fully-hedged option. Investors will be able to ride bullish trends, while greatly reducing their exposure to bear markets.