Tesla: buy the dip?

Tesla: buy the dip?

2021-03-02 • Updated

What happened?

Tesla dropped amid the wider stock sell-off and by that erased all its gains for this year. Why? Actually, there are two reasons. The first is Bitcoin. Tesla has just recently invested $1.5 billion in cryptocurrency and made $1 billion in a month from its investment. However, the current weakness of Bitcoin made some investors go away from Tesla in the near-term. The second reason is Tesla announced it would stop selling its cheapest car: The Model Y. That raised questions over the demand for Tesla cars. Since Ford and General Motors are entering the market of electric vehicles, some investors worry whether Tesla can sustain this competition.

What’s next?

In the short term, Tesla may keep falling. However, in the long term, it should rebound from its losses as the company has a huge army of fans that believe in its further prosperity. The good news for FBS traders is that they can make both buy and sell trades. So a trader doesn’t need to hold already an asset to sell it. Thus, traders have a chance to profit in case of either outcome.

If Tesla drops below the 100-day moving average of $625.00, the way down to the December low of $560.00 will be clear. On the flip side, the move above the 50-day moving average of $780.00 will drive the stock further up to the February high of $880.00.

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Besides, you can trade stocks in our app FBS Trader!

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Tesla: buy the dip?

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