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After a big drop, Tesla suddenly looks cheap(er)


Elon Musk's stock selloff and recent investigations into Tesla Autopilot have dragged down its share price by 20% in about a month.

Tesla stock entered a bear market Monday (US time) as shares of the automotive and energy company began the trading session down more than 20% from their recent highs. Tesla hit an all-time high of US$1,243.49 per share in early November but has been trading at a discount for the last month.

Tesla stock slumped days after achieving these new highs when Elon Musk announced plans to sell 10% of his stake in the company. Since then, Musk has sold more than 10 million shares.

Shares of Tesla have regained some ground since, despite a New York Times article detailing possible safety defects in Tesla Autopilot, the automaker's self-driving feature. The National Highway Traffic Safety Administration (NHTSA) launched an investigation in late-August 2021 following 12 crashes in which Teslas using Autopilot crashed into first responder vehicles.

Reuters also reported that the Securities and Exchange Commission (SEC) opened an investigation into Tesla over whistleblower claims on solar panel defects, citing a letter from the agency. The complaints allege that the company failed to properly notify its shareholders and the public of fire risks associated with solar panel system defects.

Shares of Tesla hit a session high of US$1,021.64 Monday before settling back down. The stock closed at US$1,009.01, up 0.75% for the day.

Is Tesla stock a buy?

Analysts are mixed on the stock, and the consensus is currently a "Hold" with an average 12-month price target of US$839.75. Tesla's price-to-earnings ratio is also sky-high compared to other car manufacturers. But such doubts have never kept buyers away, leading to gains of 57% in the past year and 2,500% in five years.

If you're eager to add shares, they're US$200 less each than a month ago. But If Musk continues offloading shares, you might want to consider holding off as the price could fall a bit more.

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