In a recent turn of events, shares of Tesla Inc. (NASDAQ:TSLA) have taken a nosedive, while six S&P 500 stocks have seen a surge.
What Happened: When Tesla's shares dip, six S&P 500 stocks tend to rise, CNBC Pro reported on Monday. These include Linde (NASDAQ:LIN), FMC (NYSE:FMC), eBay Inc. (NASDAQ:EBAY), Church & Dwight (NYSE:CHD), Walmart Inc. (NYSE:WMT), and Wells Fargo (NYSE:WFC). Over the past month, these stocks have shown an inverse correlation to Tesla's performance. While Tesla's shares have seen a 40% drop this year, these six stocks have generally risen.
Deutsche Bank analyst Emmanuel Rosner predicts that Tesla's rough patch may persist as the company might shift its focus from a new low-cost vehicle to self-driving technology. Rosner recently slashed his price target on Tesla's stock from $189 to $123, indicating a potential downside of around 15% over the next year.
However, it is crucial to understand that the inverse movement of these stocks to Tesla's does not imply causation or guarantee future returns or price action patterns. Church & Dwight is the only stock that showed an inverse correlation to Tesla both in March and last week.
Why It Matters: This shift in stock performance comes in the wake of Tesla's recent decisions. The company recently laid off its U.S. marketing team, with CEO Elon Musk stating that the team's ads were "far too generic." This move was part of a 10% company-wide layoff.
Additionally, Tesla has significantly reduced the price of its full self-driving (FSD) driver assistance software. Less than a year ago, Musk considered $15,000 a low price for FSD. However, the price has since been cut by about 50%. This price reduction could be a factor in the company's shifting focus towards self-driving technology.