Tesla Stock is Oversold on the Street and Could Rebound Soon

Considering recent market trends, now might be an opportune moment to consider investing in Tesla, as signs indicate potential for a rebound in its stock price.

‍

The broader market has faced challenges this week, with notable declines observed across tech-related sectors, including Tesla. Week-to-date, the S&P 500 has experienced a modest decrease of 0.2%, while the Dow Jones Industrial Average has dipped by 0.1%. Similarly, the Nasdaq Composite, heavily influenced by tech stocks, has retreated by 0.8%.

‍

However, despite the prevailing market downturn, certain individual stocks may have undergone excessive sell-offs. Utilizing the CNBC Pro Stock Screener tool, analysis focused on identifying the most overbought and oversold stocks within the S&P 500 based on their 14-day relative strength index (RSI).

‍

Stocks with a 14-day RSI exceeding 70 are categorized as overbought, suggesting potential vulnerability to a pullback as high RSIs typically signal excessive investor optimism within a short timeframe. Conversely, stocks with RSI readings below 30 are deemed oversold and could present an opportunity for recovery.

‍

Among the most oversold stocks, Tesla stands out prominently. While the electric vehicle manufacturer witnessed a remarkable surge in 2023 driven by robust revenue and delivery figures, its performance has faltered in the current year. Challenges in the Chinese market coupled with concerns surrounding its artificial intelligence initiatives have led to a significant 35% decline in Tesla's stock price in 2024, including a recent 7% drop within the past week alone.

‍

Despite holding a consensus hold rating from analysts, Tesla boasts a 14-day RSI of 29.4, indicating potential for approximately 23% upside, potentially aiding in recuperating some of its losses. Notably, Tesla's stock experienced a downturn following a downgrade by Wells Fargo to underweight from equal weight.

‍

Similarly, Boeing appears among the list of Wall Street's most oversold stocks. Beset by emerging quality control issues, the aerospace company has witnessed an 8% decline in its stock price this week and a staggering 30% downturn throughout the year. Despite recording a 14-day RSI reading of 27, sentiment surrounding Boeing remains positive, with analysts projecting a 40% upside potential according to LSEG data.

‍

Boeing's challenges have reverberated across the airline industry, impacting companies like Southwest Airlines, which saw an 18% dip this week due to delivery delays from Boeing. Nevertheless, analysts anticipate an upside of more than 11% for Southwest Airlines.

‍

Additionally, other oversold stocks include Amgen and Globe Life, indicating potential opportunities for investors to explore.

‍

Conversely, CNBC's analysis also identifies stocks that might face impending pullbacks. Among the most overbought stocks in the S&P 500, Dupont De Nemours and Targa Resources emerge. Despite recording respective 14-day RSI readings of 78 and 77.4, these stocks have experienced notable increases in their stock prices, reflecting potential for slight corrections. Similarly, Garmin, with a 14-day RSI just under 80, and other overbought names like Waste Management and Devon Energy may also face downward pressure in the near term.

‍