Tesla (NASDAQ: TSLA) is known for its price swings among major tech stocks. Long-term holders of Tesla have mostly benefited, but timing is crucial when trading.
The company continues to pursue ambitious projects in electric vehicles and artificial intelligence (AI). However, caution is warranted for investors at this time. This article explores why January 20 could significantly impact Tesla investors and whether now is the right time to buy shares.
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Understanding Tesla’s Market Volatility
Tesla’s stock has experienced significant fluctuations in 2024.
Data by YCharts.
From January 1 to November 4, 2024, Tesla’s stock fell by 2.3%, underperforming against the S&P 500. At one point, it was down as much as 42.8% during this time frame.
However, post-election on November 5, Tesla shares surged. For the period between November 4 and December 31, they climbed 66.3%, helping the company return to the trillion-dollar market cap club.
Elon Musk’s prominent support for Donald Trump during the campaign rallied optimism among investors, who viewed their alliance as a positive sign for Tesla’s future.
Nevertheless, despite earlier gains, Tesla’s stock has faced a downturn. Since December 24, shares have declined 14.3%. Seasonal sell-offs, particularly for high-performing stocks, are commonplace, especially after significant gains. Additionally, Tesla’s recent fourth-quarter delivery and production numbers missed analysts’ projections.
Despite the downward trend, it’s possible that shares could rebound as January 20 approaches. Let’s explore why.
Significance of January 20
President-elect Donald Trump will take office on January 20. Given Musk’s connections to Trump, there’s a chance that Tesla’s stock might begin to see a rise.
It’s important to remember that while Musk’s relationship with Trump could foster a more favorable regulatory environment for Tesla’s autonomous driving efforts, any short-term stock performance related to the inauguration may be more about market sentiment than actual company fundamentals.
Image Source: Getty Images
Should You Buy Tesla Stock Now?
Since the election, Tesla’s stock movement has resembled that of a meme stock. There have been no significant changes to the company since November 5, and it’s unlikely any major shifts will occur on January 20. Investors remain uncertain about the trajectory of Tesla’s autonomous driving plans and potential regulatory changes under the new administration.
Investing in Tesla right now requires confidence in its long-term strategy for AI, self-driving technology, and robotics. If you’re optimistic about these areas, the timing of your investment may be less critical.
On the other hand, investing in high-volatility stocks like Tesla carries inherent risks. Those with a low risk tolerance might consider waiting before diving in.
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Adam Spatacco holds positions in Tesla. The Motley Fool also holds positions in and recommends Tesla. The Motley Fool has a disclosure policy.
The views and opinions expressed herein belong to the author and do not necessarily represent those of Nasdaq, Inc.
