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Tesla Stock Won’t Stop Dropping. Here’s How Low It Could Go.

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Brand-new cars at the Tesla factory in Fremont, Calif.

Justin Sullivan/Getty Images

Tesla stock is now down about 46% year to date.

Growing competition in electric vehicles, inflation, softening demand, Covid issues in China, and an uncertain economy all might have derailed


Tesla

stock (ticker: TSLA). Yet shares held up relatively well through all those headwinds. Twitter is the straw that is breaking the camel’s back.

Tesla stock was down another 2%, at $193.08, in recent trading. The

S&P 500
was up 0.3%. The

Dow Jones Industrial Average
was up 0.7%.

Shares have been on a painful slide ever since CEO Elon Musk closed his acquisition of Twitter. Since then, Tesla stock is down about 16%. The S&P 500 is flat over the same span. The

Nasdaq Composite
is off about 2%.

The pattern in the Tesla stock chart looks troubling, according to technical analysts Katie Stockton of Fairlead Strategies and John Roque of 22V Research. Stockton sees some support at $180 a share and then lower at $150 a share. Roque says that $100 is possible if things don’t start improving for the auto maker.

Both analysts are concerned with stock charts, not fundamentals. Traders look for patterns in stock charts as a shortcut to understanding what fundamental-focused investors are thinking.

Investors are nervous. There is a lot to worry about amid rising interest rates and falling prices, which can hit any auto maker’s profit margins, including Tesla.

The biggest issue, however, seems to be brand damage caused by Musk’s activity at Twitter, including mass layoffs and questionable tweets such as one about conspiracy theories involving Paul Pelosi.

“The genius advertising system that [Musk] had [for Tesla] was his perception as this guy trying to save the environment. What a great guy,” says Gerber Kawasaki Wealth Management CEO Ross Gerber. “Now it’s, ‘Oh, this is the guy letting [bad actors] back on social media.’ That’s harmful to Tesla.”

How to fix what is ailing Tesla stock now isn’t easy to figure. Tesla fans on Twitter ran a poll with roughly 9,000 votes about the possibility of Tesla hiring public-relations staff. Most respondents voted for the company to do so.

Maybe PR is part of the solution. Maybe the storm will simply pass. “We believe [this is] overdone, but in this market, perception is reality for Musk,” says Wedbush analyst Dan Ives.

Ives is a Tesla bull, rating shares Buy. His price target for the stock is $300. That would be up more than 60% from recent levels.

Investors hope Ives is correct and the tide of perception turns soon. Something will have to change perception, though. Otherwise traders will keep selling any stock that looks as weak as Tesla does these days.

Write to Al Root at allen.root@dowjones.com

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