Tesla investors were hit with a 21% plunge on Wednesday following an incredible rally lasting two weeks. There was a general consensus that Tesla’s stock price would undergo a market correction at some point in time. As the stock continued to grow at an un-precidented rate the amount of risk entering the stock increased 10 fold, eventually causing a¬†firesale Wednesday morning driving the stock price into the ground.

What’s likely to happen come open Thursday?

Tesla closed at $734.70 and after hours¬†have been slightly lower at $727.50. Looking at after hour movements, it would be unlikely for Tesla to take another massive dip at open on Thursday. From my research and understanding of Tesla’s price movements, I can see the stock staggering at $720 and slowly declining under $700 at close Thursday. There will be investors buying stake if the company falls below $700 which may balance out volatile movements tomorrow.

It is less likely that the stock will end green Thursday as many investors see Tesla falling as low as $570 before properly stabilising. Investors should determine their own prefered entry point as many brokers have predicted different things. From my understanding, I believe that Tesla will not fall below $500 unless the company goes solvent or a recession takes place (This is my opinion and Investors are advised to do their own research).

What Tesla experienced on Wednesday is a natural occurence in the market, as investors see the stock as more overvalued and risky. This cognitive behaviour causes a sense of panic amongst investors that want to get out before they lose their profits. Long term investors should not stress about the recent decline as Tesla has very serious backing by many investors and is expected to increase nicely in the next 5 years (ARK prediction).

Read more about Tesla here.

The information above should not be taken as financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

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