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Here’s why Tesla stock might crash in August

Here's why Tesla stock might crash in August

Elon Musk’s electric vehicle (EV) maker, Tesla Motors (NASDAQ: TSLA) has arguably made the biggest comeback of 2024. After trading deeply in the red in the initial months of the year and even spending some time as the worst-performing stock in the S&P 500, it suddenly skyrocketed in value in late June.

Indeed, the rally was significant enough that the stock, within less than two weeks, went from being approximately 25% down in the year-to-date (YTD) chart to being up 6.33%. In the last 30 days, the EV maker surged 54.70%, and Tesla price today, at press time, stands at $264.25.

TSLA stock YTD price chart. Source: Finbold

Why the Tesla rally might be fragile

TSLA stock has received substantial help in this remarkable journey from factors such as Elon Musk increasingly pushing for it to be viewed as an artificial intelligence (AI) and robotics company rather than a car manufacturer and from a better-than-expected delivery report published in early July.

Part of the rally has also been driven by increased talk and on-the-road testing of Tesla’s self-driving technology – FSD – though this has been dampened somewhat by Mercedes (ETR: MBG) beating it to the punch with the current models.

The rally, despite it being undeniably impressive, may be standing on unstable ground. For starters, Tesla has now become significantly overbought, which carries a risk of impending correction.

Additionally, the delivery report that helped drive the rally shows only that Tesla is not in as dire a situation as many believed, as it still registered fewer vehicles being shipped than in the same period in 2023.

In some ways, this is similar to the EV maker’s first-quarter earnings report, which fed only a short-lived rally since it was relatively weak, just not as weak as many investors feared.

Why August may be the most important month in 2024 for Tesla stock

Tesla’s make-or-break moment, however, may come on August 8, the day Elon Musk hinted that the ‘robotaxi’ –  also known as the ‘Cybercab’ –  will be unveiled. 

The event carries significant potential since even a working prototype of a fully autonomous taxi would demonstrate just how far ahead the company is with its self-driving technology. 

Indeed, while any level of self-driving is a feat, the ‘Cybercab’ would be particularly impressive since, presumably, the passengers would not be required to intervene should the program make an error. 

On the other hand, August 8 might prove catastrophic should the autonomous taxi disappoint or fail to be presented at all. 

Given Musk’s reputation for broken promises – perhaps best exemplified by the drama surrounding his purchase of X – it is possible that the ‘Cybercab’ announcement was an empty marketing ploy designed to bolster the argument Tesla is an AI company.

Finally, however, the date may come and go and have little impact on TSLA shares even if there is no event given how forgiving traders have been when it comes to broken promises.

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