Tesla continues to drop as expansion plans were interrupted
One of the largest electronic car stock holders, Tesla, continues to underperform for several days in a row now.
Now, Tesla started the trading session below the red line after Reuters announced that the company froze the progress of expansion related to its Shanghai plant.
According to the report, the decision was made in relation to the standing between U.S. and China. Though the current president, Joe Biden, is not as temperamental and harsh as former president Donald Trump, the status of the relationship between the two countries haven't made any progress.
Other electric car stocks such as Li Auto and NIO have dropped for today's start of session, but managed to rise up to just slightly below the red line. Though they have managed to attract traders, the deterioration of the relationship between U.S. and China can affect both Tesla and the Chinese electric car producers.
Tesla also was greatly affected by tech stocks being under pressure due to the traders worrying about inflation, and now are switching to value stocks. In this kind of set up, the series of disappointing news served as the catalyst for tech stocks to turn bearish.
NASDAQ tried multiple times to create an upward momentum in April to set new highs and to be less affected by the downward trend, but in the end failed to do so and is now back to March 2021 level.
This is a sufficient testament as for how bearish the market is for tech stocks at the moment due to the possibility of inflation being just around the corner. Though Tesla was given high valuation, being tech based meant that it is heavily dependent on market mood in the near foreseeable future.
The current standing of Tesla can be seen in a good light too, as the pullback may pull some traders who are interested in the companies' shares at discounted prices.
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