Why Tesla stock was up sharply on Wednesday

Did the stock’s sell-off earlier this week go too far?

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Shares of electric vehicle maker Tesla (NASDAQ: TSLA) are up sharply on Wednesday. As of 10:30 a.m. EDT, the stock had risen 3.5%.

There doesn't seem to be any material news behind the stock's move. But shares might be rebounding from a sell-off on Monday and Tuesday.

So what

Shares of Tesla had slid a total of 7% on Monday and Tuesday amid news that the National Highway Traffic Safety Administration had opened a formal safety probe into Tesla's driver-assist technology, Autopilot. 

Perhaps some investors think the decline in the electric vehicle's stock went too far and are buying shares after the recent pullback. It's also possible that some investors who were shorting the stock are taking their gains and closing out some of their bets against shares by covering their positions.

Whatever the reason for the sharp gain today, there seems to be some technical support for the stock in the $670 and $680 range for now.

Now what

Tesla stock has been an underperformer in 2021. Shares are down 2.5% year to date, even as the S&P 500 has risen nearly 19%. But the automaker's business has been doing well. The company reported more than $1 billion in quarterly unadjusted net income for the first time in the second quarter. In addition, management reiterated expectations for deliveries to rise more than 50% this year. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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