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Tesla Has Lost Over 15% in a Week: What’s Weighing on the Stock?

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Dec. 20 2018, Updated 1:05 p.m. ET

Tesla stock

Tesla (TSLA) has been one of the most exceptional stocks in the fourth quarter. The stock outperformed the broader market over the last couple of months. In October, TSLA surged 27.4% against a 6.9% drop in the S&P 500 Index (QQQ)(VTI). Similarly, the stock inched up 3.9% in November, compared to a 1.8% recovery in the S&P 500. However, Tesla bears seem to be back in action again. Today at 9:42 AM ET, Tesla was trading with 4.2% losses at $319.04. This market price translates into 15.3% drop since last Thursday, December 13’s, closing price.

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What could be driving the pessimism?

Last week, China announced a cut in import duties on US-made vehicles to 15% from 40%. This tariff reduction is applicable for a period of three months starting on January 1. Following this news, Tesla acted quickly and reduced the prices of its Model S and Model X vehicles in China, Reuters reported.

This was the second time in less than a month that Tesla slashed its Model S and Model X prices in China. Chinese electric carmaker NIO’s (NIO) ES8 and ES6 models are priced much lower in China than any of Tesla’s vehicles in their respective segments.

On December 7, Jefferies upgraded its “hold” ratings on Tesla to “buy,” according to a CNBC report. Jefferies also raised its target price on Tesla stock to $450 from $360. According to CNBC, Jefferies analyst Philippe Houchois said, “Tesla should continue to stand out with broader price points, battery security of supply, product edge and a brand that transcends the volume/premium divide.”

Despite these positive factors, investors’ skepticism about Tesla’s fourth-quarter vehicle deliveries and production could be why many investors are turning cautious.

As of December 19, Tesla, NIO, Ford (F), General Motors (GM), and Apple (AAPL) were up 25.8%, down 2.1%, down 10.1%, up 3.7%, and down 28.7%, respectively, on a quarter-to-date basis.

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