Tesla shares trade below S&P 500 listing price as death cross looms

  • Shares of Tesla fell 6% on Tuesday, well below its S&P 500 listing price of $695.
  • Stocks have been under pressure amid a tech sell-off and investor caution over Musk’s Twitter deal.
  • Tesla shares are about to show a bearish death cross, a technical analysis sell signal.

Shares of Tesla fell 6% on Tuesday to $627.65, cementing their drop below price as S&P Dow Jones Indices added them to its popular S&P 500 index.

Tesla was added to the S&P 500 on December 21, 2020, after the company reported more than four consecutive quarters of profit. Tesla shares were trading at around $695 a share when they were added to the index.

Tesla’s plunge comes amid a sell-off in tech stocks, with the Nasdaq 100 Index officially in

bear market

territory, 29% less so far this year. Tesla shares are down 39% so far this year, and are down about 50% from their all-time high.

The drop is likely to have been exacerbated by CEO Elon Musk’s $44 billion deal to acquire Twitter. That has turned into what Wedbush’s Dan Ives called a “circus” as Musk is trying to call off the deal, citing the number of fake accounts on the platform.

But Musk signed a contract with Twitter, agreed to a $1 billion breakup fee and waived his right to conduct due diligence, as outlined in Twitter’s Securities and Exchange Commission filing on the deal. Ives said all of this drama is taking its toll on Tesla investors.

“This circus sideshow has been a huge glut in Tesla stock and has been a black eye for Musk thus far, in our opinion, on how he has handled this spiraling situation,” Ives said in a note on Monday. “We believe that with Twitter’s shareholder meeting on the horizon and the expected approval of the deal, Musk is facing a fork where he has to decide his next step in this soap opera, as the patience of Tesla investors is wearing thin. exhausting”.

Nor is Tesla stock helped by an impending doom cross, a bearish sell signal in technical analysis that alerts traders to a solidifying downtrend in share price. The death cross occurs when the 50-day moving average drops below the 200-day moving average, which is on track to happen before the end of this week.

The lagging indicator means Tesla shares are likely to continue to slide, which could lead to further weakness as Musk has pledged millions of Tesla shares as collateral to buy Twitter.

“If the Twitter deal were to close today and Tesla’s stock price subsequently fell to $350-400, Musk could be forced to sell ~13 million Tesla shares,” Bernstein analyst Toni Sacconaghi said. , in a note on Tuesday. That potential margin call is just one more reason some Tesla investors are likely concerned about Musk’s deal to buy Twitter.

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