It's not EV Competition that's Causing Tesla Stock to Fall

There's a second consecutive drop in Tesla stock today. Investors might not be concerned about the introduction of new electric vehicles. The stock chart offers a better explanation.

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After falling 5% on Friday, Tesla stock (TSLA) is down 2% this morning. What's more, shares are declining while the broader markets are gaining. The S&P 500SPX +0.89% and Nasdaq CompositeCOMP +1.26% are up 0.9% and 1.4%, respectively, during this period.

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Some may think Tesla bulls are worried about more EV competition due to that gap. It makes sense for investors to consider competitive products. As part of the Super Bowl broadcast Sunday, General Motors (GM) and Stellantis (STLA) both showed advertisements for electric vehicles.

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Last year's Super Bowl aired more EV ads than this year's. Tesla stock jumped the day after the game.

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Tesla shares have plunged after being up for eight consecutive days before Friday's drop. Shares are down more than 100% from the 52-week intraday low of $101.82 on Jan. 6.

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In a report on Monday, Evercore ISI technical analyst Rick Ross recommended taking profits after Tesla shares doubled into resistance.

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According to Ross, the $200 level is the resistance he is referring to, which Tesla stock slipped under in November, so he is not concerned with Tesla's fundamentals.

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The stock looks stretched, according to Ross, which is in line with what other analysts, including 22V Research's John Roque, Fairlead Strategies' Katie Stockton, and CappThesis' Frank Cappelleri, have said recently.

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The $200 level is key for Tesla shares, according to all four technical analysts. Investors worried about rising interest rates and inflation in 2022, so the stock was often around that level.

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Tesla shares finally dropped below $200 late last year after CEO Elon Musk purchased Twitter.

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The analyst does not anticipate a big drop but says it’s time for a recharge, not a re-short. In his report, Ross says that he wants shares to consolidate their gains and remain around current levels for a while. It is healthy for a stock that has moved so rapidly that it has formed a base of support.

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As a result of the two-day drop, Tesla shares are up about 56% year-to-date, but down about 33% for the whole year.

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The stock charts can be viewed for now, but there's a big fundamental event in the works. When management talks about new vehicles, production ramp-up, and costs and competition, investors and analysts will expect to hear about new vehicles, production ramp-up, and costs and competition.

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The event could cause Tesla stock to trade above $200.