Investors haven't been big believers in Tesla the last few days.
The stock is down 5 percent in the past week, and falling back into bear market territory after renewed fears over the company's Model 3 production had investors hitting the sell button. As far as the stock's future performance is concerned, it all comes down to whether the company can deliver, said Boris Schlossberg, director of FX strategy at BK Asset Management.
"The car itself is so great that if you can just unleash it onto the populace and demand fills what it's supposed to fill, all of those problems will go away," he said Wednesday on Bloomberg "So in some ways, it's sort of the ultimate faith stock and you have to just be a huge believer. … If you are, then it's probably a great buy here because it will recover."
Despite the recent drop, Tesla is still up 47 percent year to date, tracking for its best year since 2014.
But in addition to the risks surrounding Tesla's Model 3 production and delivery numbers, Dennis Davitt of Harvest Volatility Management points to two more factors that could cause investors to lose their faith in the stock.
The first, he says, are interest rates. "As rates keep climbing higher, that's going to be a concern for Tesla," he said on "Trading Nation." "Tesla is very linked to interest rates for all of the borrowing that they have on their debt on their balance sheet."
The second risk could be Tesla's new semi trucks that CEO Elon Musk himself unveiled back in November. While orders for the truck are already piling up, Davitt cautions that the semi's battery could actually be another Achilles' heel for the automaker.
"If you talk to people who are in the trucking business, the biggest problem with the semi truck is the time to recharge the batteries," he said. "Semi trucks need to move to make money; sitting idle for 8 or 9 hours while batteries recharge is not necessarily the most efficient use of the capital spent to buy that truck."
Tesla recovered some of its losses on Thursday, trading at around $315.30.
Bloomberg Pro Terminal
Trader Velizar Mitov
Read more:
25 Canada Square, Level 33, office 50, Canary Wharf London, E14 5LQ +44 20 3608 6256
World Financial Markets - 0700 17 600 Varchev Exchange - 0700 115 44
Varchev Finance Ltd is registered in the FCA (FINANCIAL CONDUCT AUTHORITY) with a passport in the United Kingdom: FCA, United Kingdom - registration number: 494 045, which allows provision of financial services in the United Kingdom.
Varchev Finance Ltd strictly comply with the statutes of the European directive MiFID (Markets in Financial Instruments). targeting increased efficiency, transparency and uniformity of financial instruments.
Varchev Finance Ltd is authorized and regulated by the Financial Supervision Commission - Sofia, Bulgaria: License number RG-03-02-05 / 15.03.2006
The information on this site is not intended for distribution or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
Disclaimer:
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63,41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.