How the Cybertruck Explosion Could Impact Tesla Stock

The Cybertruck explosion was a very pivotal moment which may shape the direction of Tesla's share prices over the next few weeks to months.

The explosion occurred on January 1st in front of Trump Tower in Las Vegas, Nevada. The suspect who allegedly purposely set the car on fire shot himself just before the explosion, proving its purposeful motives.

This explosion has already been fatal for Tesla stock in the past few days. The stock went from near all-time highs well above $400 to below $395 for the first time since before the 2024 election. While its decline may also be due to its oversaturated value being corrected, the explosion was significant enough to send the stock plummeting even further.

Elon Musk repeatedly touted his new all-electric Cybertruck as safe an effective, yet this week's incident proved otherwise. It causes the company's reputation to get damaged, and even worse for investors to fear further pouring capital into its publicly traded stock listing. As a result, in the greatest fashion since the company's fatal earnings report in July, a massive selloff ensued, sending it downward.

Also, this may have long-term implications. Musk, often regarded as one of Donald Trump's biggest allies, is partially responsible for this damage which he inflicted on Trump's property. Also, Musk's dangerous reputation will continue to impact him, as he will have the spotlight over the next few months as the co-leader of the Trump administration's Department of Government Efficiency. With Tesla's image now burdened, many investors may never come back to the company for a long time, not giving the company a steady stream of capital from investment and thus leading to its gradual downfall.

Is it over for Tesla? No. The stock is still overvalued and remains one of the largest market-valued stocks on the NYSE. Elon Musk, learning of the flammable nature of his vehicle, might introduce improvements to his product which may make it safer for driving. Overall, Tesla's revivability is surely possible.

Is Tesla a strong buy right now? Despite the stock plummeting significantly, it may not be the right time to buy; the stock remains heavily overvalued, often surpassing its actual tangible value by hundreds of billions of dollars in market cap on a day-to-day basis. This could keep the stock going down over the next few weeks. It's possible that, after a solid duration of consolidation at a steady level, the stock could make some recovery.