Why Tesla Shares Have Been Sinking This Week

What happened

The major U.S. stock indexes are having a down week, but Tesla (TSLA 2.60%) shares are faring much worse. While the S&P 500 index and Nasdaq Composite index were trading lower by 1% and 1.5% this week, respectively, as of Thursday afternoon, Tesla was about 11.5% below last Friday's close at that time, according to data provided by S&P Global Market Intelligence.

So what

Tesla's decline is a continuation of a trend that started several months ago. Tesla shares are down by nearly 50% in just the past three months. This week had some new developments that helped contribute to the drop, however. 

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NASDAQ: TSLA

Tesla

Today's Change

(-2.60%) $-11.55

Current Price

$433.45

Key Data Points

Market Cap

$1.6T

Day's Range

$422.29 - $447.80

52wk Range

$273.21 - $498.83

Volume

2.9M

Avg Vol

63M

Gross Margin

19.07%

There has been growing concern from analysts that the company will report disappointing fourth-quarter vehicle sales. At the same time, CEO Elon Musk has been focused on his new role as CEO of Twitter, which has stirred some controversy that investors feel might be damaging to the Tesla brand. And today, it was revealed that Musk has sold another 22 million Tesla shares this week worth nearly $3.6 billion. 

Image source: Tesla.

Now what

Those sales came as the stock was trading near a two-year low, further concerning investors. Musk has now sold about $23 billion worth of his Tesla shares in 2022. Most, if not all, has been related to his purchase of Twitter. While that may not have anything directly to do with Tesla's underlying business, it adds to anxiety that Musk isn't focused on Tesla right now. 

While Tesla's production has still been growing near its 50% growth target so far this year, some investors think there will be bad news coming when Tesla reports its fourth-quarter delivery data. That has all combined to drive Tesla shares down further than the market in general this week. The negativity surrounding the stock could be squelched if the company in fact reports another strong quarterly period. With its price-to-earnings (P/E) ratio now near its recent growth rate -- in other words, its P/E-to-growth (PEG) ratio nearing 1 -- it could look like a good time to buy some shares on this week's decline.