Tesla: Driving off a cliff?

Ok here's where things are getting interesting for me. It's a cliff-hanger to be certain. $Tesla Motors(TSLA)$ just dropped 5% premarket to $117 on 27 Dec (SGT). I don't know why but I have a feeling it will fall past the support of $110. It is certainly a bear's dream as they continue to short Tesla and make big bucks from it.

But what's going on with Tesla? Is it:

1. It's possible suspension of production last week in Shang Hai?

2. Investors losing confidence and patience with Elon Musk?

3. Elon warning for those who traded on margins and are at risk of "mass panic" due to fall of Tesla's share price.

It is strange isn't it, that a company with a good business model going down because of the CEO's antics. Having sold off around $40 billion of his shares and yet espousing on the impending recession, is this any wonder?

As an investor, Tesla's share price has never looked more attractive, especially if you are willing to guess where the bottom is. 3 months ago, shares at this price would have been snapped up immediately but today, investors look at it with intrepidation at when the next floor of support will be.

While I don't practice shorting (I haven't learnt to trade on margins), I am wary of doing so, knowing that the sentiment could change at any moment. This is why this "cliff-hanger" is interesting because of the potential rebound once the sentiments change. This is in the short run.

In the long run, there is no reason to doubt Tesla's business model despite the possible chance of recession. I believe that it will continue to fight $Byd Company Limited(002594)$  for market share with its quality EVs and innovation (which is advantageous against Byd's lower costing cars).

Certainly a dilemma right? My take? If you want to take the chance, do so with caution. As always, times have always been volatile and it is better to look long term but prepare for risks short term.

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