Shares of Tesla, Inc. (TSLA) increased its losses during Tuesday’s session as the market continues to re-evaluate the company’s valuation amid rising real interest rates and falling Bitcoin prices (BTCUSD).
Tesla shares traded at a forward price-to-earnings ratio of more than 185 times compared to just 19 times for the wider automotive industry. With rising real interest rates, the market has shifted from growth to stock value, putting pressure on high valuations. The electric vehicle industry is also dealing with interruptions from the global shortage of chips.
There is also a bitcoin corner. After buying $ 1.5 billion worth of bitcoin, Tesla raised about $ 1 billion earlier this month, effectively linking stock valuations to cryptocurrency performance. Bitcoin prices fell more than 8% during Tuesday’s session, which may have further contributed to the sale of Tesla shares.
A real interest rate is an interest rate that is adjusted to eliminate the effects of inflation to reflect the real cost of funds to the borrower and the real profitability of the lender or investor. The real interest rate reflects the percentage of time preference for current goods over future goods.
Technically, Tesla shares fell from a 50-day moving average of $ 770.71 on Monday before falling further to key support levels on Tuesday. The relative strength index (RSI) approaches oversold levels with a reading of 30.50, while the divergence of convergence of the moving average (MACD) remains in a sharp decline. These indicators suggest that stocks could see some short-term consolidation, but the general trend remains sword.
Traders should watch for consolidation between the support of the trend of about 650.00 dollars and the 50-day moving average of 770.71 dollars in the next sessions. If the stock falls apart, traders can see a move to support Fibonacci at $ 592.02 or $ 508.28. If stocks explode, traders should watch for a retest of highs of about $ 900.00.
Shares of Tesla increased their losses during the session on Tuesday, as the market revalues estimates against the background of rising real interest rates. In addition, stocks could be affected by the fall in bitcoin prices after its $ 1.5 billion investment, as well as a global shortage of chips.
The author does not take a position in the mentioned shares, except through passively managed index funds.