Tesla Stock Slips Premarket After 6-Day Winning Streak: What’s Behind The Drag?

Tesla, Inc. (TSLA) stock fell 0.74% in the early premarket session on Wednesday, signaling a potential reversal after six consecutive sessions of gains.

The recent winning streak helped the Tesla stock turn to the black for the year. For the year-to-date period, the stock has gained about 4.40% as CEO Elon Musk reaffirmed his commitment to the electric-venture business he runs by buying $1 billion worth of stock. Musk, who has multiple ventures, also suggested that he would spend more of his time on Tesla. Also buoying sentiment is analysts' expectation of a delivery beat for the third quarter.

The rally has pushed the stock’s 14-day relative-strength index (RSI), a momentum indicator, to a level suggesting extremely overbought conditions. Wednesday’s premarket weakness could also indicate profit-taking on the recent gain ahead of a key risk event. The Federal Reserve is due to announce its September rate decision at 2 p.m. ET on Wednesday, with most analysts bracing for a “sell-the-news” downward move in the market.

On Stocktwits, retail sentiment toward the Tesla stock stayed ‘extremely bullish’ (89/100) and the message volume was also ‘extremely high.’

In other recent headlines, the National Highway Traffic Safety Administration has begun a probe into whether the electrically powered handles of the company’s 2021 Model Y are defective. “This investigation will also assess the approach used by Tesla to supply power to the door locks and the reliability of the applicable power supplies,” the regulator said in a post on its website.

Separately, Reuters reported that Tesla has agreed to settle two lawsuits tied to fatal 2019 crashes involving its autonomous driver-assistance (ADAS) software. The settlements follow an early August Florida jury verdict awarding $243 million in damages to victims of a Model S crash. Trials for both cases had been scheduled to begin in October.

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