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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