Tesla Motors Inc (NASDAQ:TSLA), Netflix, Inc. (NASDAQ:NFLX) and Facebook Inc (NASDAQ:FB) are three trending IT stocks expected to trade actively in Monday’s trading session. Tesla stock dropped on Friday, breaking into bear market territory similar to what Netflix and Facebook shares experienced. These three stocks were huge winners in 2013, but Tesla was the top performer with an increase of 344% last year.
No specific reason for the recent sell-offs
According to Andrew Left at Citron Research, Tesla Motors Inc (NASDAQ:TSLA) and Netflix, Inc. (NASDAQ:NFLX) are the “cult stocks,” which implies that these stocks have committed investors, who follow their product and also the stock trends. No specific reason for the recent sell offs can be unearthed for these stocks, but John Spence at Covester said that he is concerned about higher interest rates, which will eventually cause investors to reduce their risk.
Jim Chanos of Kynikos associates, who has been cautioning investors against Tesla Motors Inc (NASDAQ:TSLA) and Facebook Inc (NASDAQ:FB) since September, believe that the market caps of both the stocks are substantially above tradable floats, which might cause volatility. Other stocks that are trading in bear territory are Amazon.com and Pandora Media Inc.
Market sentiments matter more for Tesla
Tesla Motors Inc (NASDAQ:TSLA) has been at the gunpoint of the short sellers, and short interest in Tesla a few weeks ago totaled to more than 31 million shares, which is around 37% of the 84.5 million shares that are traded on the open market. The direction of movement of Tesla shares is greatly influenced by market sentiments rather than factors directly related to its business. Many investors and analysts are enthusiastic and bullish on Tesla, but right now the short sellers have the upper hand.
Just a month ago, Facebook Inc (NASDAQ:FB) shares outperformed analysts’ price targets and the stock soared to $70, up 28% for the year. Overall, 38 analysts currently assign a Buy rating on the stock, and 16 assign a target price below the trading price.
Biotechnology stocks have also been crushed over the last couple of weeks, after enjoying a strong run-up in recent months.