What happened

Tesla (TSLA 3.17%) shares have dropped, jumped, and then dropped again today. And that makes some sense considering the news of the day. After sinking as much as 3.5%, the stock rose as high as 2.6% Friday morning. As of 12:42 p.m. ET, Tesla shares were back trading lower by 0.7%.

So what

The wild fluctuation is understandable, given the stock has seen extended downward momentum recently. Tesla shares have dropped nearly 60% in just the last 90 days.

After today's sharp decline, it seemed to be positive news for the stock as Tesla CEO Elon Musk said he will not sell any more shares until at least 2024, maybe later. That comes after he sold about $24 billion in stock just in 2022 and nearly $40 billion over the last 12 months (related to his purchase of Twitter).

But Wedbush analyst Dan Ives -- who has been a vocal supporter of the stock -- released a more pessimistic view yesterday. Ives thinks macroeconomic conditions have become a major headwind for Tesla's business and was critical of Musk in a research note shared by Barron's.

front end of red Tesla Model S.

Image source: Tesla.

Now what

Ives noted that competition is growing in the critical U.S. and China markets, and other issues are likely also affecting sales. He also criticized Musk's recent leadership, as the Tesla CEO seems more focused on running Twitter. Ives wrote, "At the same time that Tesla is cutting prices and inventory is starting to build globally in the face of a likely global recession, Musk is viewed as asleep at the wheel from a leadership perspective."

While Musk may (or may not) be done selling any of his shares, the fundamental business is what investors should watch. Competition wasn't unexpected, and the market should grow enough for Tesla to lose overall market share but still experience strong growth. But in the short-term, economic conditions may cause a shortfall in sales versus expectations. Those crosscurrents help explain today's big swings.