Action Investments Limited - When a company's value decreases, investors have little leeway

SHEUNG WAN, Hong Kong - March 28, 2023 - PRLog -- The reasons for today's drop are similar to those that have contributed to the stock's more than 40% drop in the last three months. However, there are some new developments.

Investors have been selling TSLA shares since CEO Elon Musk has had to sell some of his own this year to fund his acquisition of Twitter. Musk has sold around $19 billion in total in connection with the purchase of Twitter in 2022. He has recently had to devote time and efforts to the social media firm.

Today's dip can possibly be attributable to a recently announced recall, as well as heightened fears in China over COVID-19 limitations.

Over the weekend, China claimed three COVID-19 deaths in its capital, Beijing. This was the first official death caused by the virus in China since May. As the number of reported cases grows, officials have now sealed off the most populated section of Guangzhou, China's largest southern port city. TSLA's largest factory is in Shanghai, and investors are concerned that any disruption in sales from that facility will have a significant impact on the company's fourth quarter results.

It certainly didn't help investor mood when TSLA issued a recall of 321,000 vehicles in the United States over the weekend. However, the revelation was more of a headline than a concern for commercial consequences. The recall was issued due to a problem with the rear taillights, which will be resolved via over-the-air upgrades.

However, investors see multiple factors building up right now, and TSLA stock is still valued well by traditional standards. On a trailing-12-month basis, its price-to-earnings (P/E) ratio remained over 50. As a result, recent news damaging the firm and the brand is causing the stock to fall further. Long-term investors may see this as an opportunity to begin dipping into the stock as the company's prospects improve.

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