What’s Next for Tesla Stock After Privatization Speculation?

Tesla, Inc. (TSLA) shares have experienced significant fluctuations, climbing to nearly $370 in mid-June before dropping over 20% to $290 by late July. The stock then surged more than 30% to $390 in early August, only to retreat again to $290 by mid-August. This volatility was largely triggered by CEO Elon Musk’s unexpected tweet about taking Tesla private, alongside the launch of the Model 3.

Over the weekend, Musk abandoned the $72 billion plan to privatize Tesla, initially causing shares to dip more than 5% in pre-market trading before recovering after the market opened. Although a consortium was prepared to invest $30 billion to take Tesla private, Musk emphasized that current shareholders preferred the company to remain public. He also noted that private investors would have gained excessive control, and smaller shareholders might have been excluded if privatization proceeded. (Also see: Tesla Shorts Profited $1B Following Go-Private Tweet.)

Investors are now concentrating on Model 3 sales, which have shown promising momentum. Analysts at Baird estimate Tesla averaged roughly 1,500 VIN registrations daily in August. Nevertheless, ongoing SEC scrutiny of Elon Musk and the absence of an active search for a chief operating officer (COO) could continue to pressure Tesla’s stock fundamentals in the near term.

From a technical perspective, Tesla’s stock has fallen below its 50- and 200-day moving averages and is hovering near the pivot point at $316.35. The relative strength index (RSI) stands at a neutral 43.63, while the moving average convergence divergence (MACD) experienced a bearish crossover in mid-August and continues trending downward. These signals imply the stock may face further declines before stabilizing.

Traders should monitor for a potential drop to retest trendline support near $290 in the coming weeks. Should Tesla’s stock rebound above critical support levels, a rally toward the R1 resistance at $346.57 could follow. Currently, the bearish outlook seems more probable, but Tesla’s history of impactful announcements means these trends could shift rapidly. (For additional insight, see: Tesla Model 3 Teardown Highlights Issues: UBS.)

Chart provided by StockCharts.com. The author does not hold positions in the stocks mentioned except through passively managed index funds.

Have a news tip for our reporters at Investopedia? Email us at tips@investopedia.com.

Discover engaging topics and analytical content in Markets News as of 01-09-2018. The article titled " What’s Next for Tesla Stock After Privatization Speculation? " provides new insights and practical guidance in the Markets News field. Each topic is meticulously analyzed to deliver actionable information to readers.

The topic " What’s Next for Tesla Stock After Privatization Speculation? " helps you make smarter decisions within the Markets News category. All topics on our website are unique and offer valuable content for our audience.