Tesla Falls 6% As Hedge Funds Carry Out 'Trump Trade' Rebalancing, Gary Black Says President-Elect Could Help Secure Robotaxi Approvals

Tesla (TSLA) Stock's Tumultuous Week

Tesla, the electric car and clean energy company, has had a tumultuous week on the stock market. On Monday, Tesla shares plunged 6.8%, marking their worst one-day performance since September. The decline followed a broader sell-off in technology stocks and concerns about the company's valuation. Despite the recent dip, Tesla's stock is still up over 600% year-to-date.

Reasons Behind the Drop

According to Gary Black, managing partner at The Future Fund, the recent sell-off in Tesla stock is due in part to hedge funds rebalancing their portfolios following the U.S. presidential election. "Hedge funds have been reducing their exposure to growth stocks, including Tesla, and rotating into value stocks," Black said.

Potential Impact of President-Elect Biden

Black also believes that the election of Joe Biden as president could have a positive impact on Tesla's stock. "Biden has been a vocal supporter of clean energy and electric vehicles," Black said. "His administration could help to accelerate the adoption of electric vehicles and provide support for companies like Tesla."

Tesla's Robotaxi Plans

In addition to the potential impact of the Biden administration, Tesla is also facing challenges related to its plans to launch a robotaxi service. The company has been testing its self-driving technology for several years, but it has yet to receive approval from regulators to operate a commercial robotaxi service.

Regulatory Hurdles

Tesla faces a number of regulatory hurdles before it can launch a robotaxi service. The company must first obtain approval from the National Highway Traffic Safety Administration (NHTSA) to deploy its self-driving technology on public roads. NHTSA has been reviewing Tesla's self-driving technology for several years, but it has yet to make a decision on whether to grant approval.

Competition from Other Companies

Tesla is not the only company developing self-driving technology. Several other companies, including Waymo, Uber, and Lyft, are also working on developing their own robotaxi services. This competition could make it difficult for Tesla to gain market share in the robotaxi market.

Conclusion

Despite the recent challenges, Tesla remains a well-positioned company in the electric vehicle and clean energy markets. The company's strong brand, innovative technology, and potential for growth make it an attractive investment for many investors. However, investors should be aware of the risks associated with investing in Tesla, including the volatility of its stock price, the regulatory hurdles it faces, and the competition it faces from other companies.