Wednesday, 5 July 2017

TSLA - decisive break of trend

Tesla (TSLA) saw a decisive break of rising trend/support - that stretches back to Dec'2nd 2016, settling -7.2% at $327.35. With the infamous squid - Goldman Sachs, downgrading the stock from $190 to $180, the stock is set to remain under downward pressure.

TSLA, daily

TSLA, monthly


Technically, today's break is a decisive one.

Its somewhat ironic to see GS only downgrade Tesla by $10, but the renewed sell rating of $180 has certainly spooked some within the mainstream.

Daily: a clear break of the upward trend that stretches back to early Dec'2016. Next soft support is the psy' level of $300, and then the $280/270 zone. The 200dma is currently at $258, and should be near $270 by late July/early August.

Monthly: a rollover is underway, note the key 10MA, currently at $272. Considering the underlying strength within the broader equity market, Tesla should be able to find a floor around the 280/270s this summer.

I'll close on this twisted, but valid thought....

If you were a Tesla stockholder, it is a sad FACT that if your company sold ZERO vehicles, its balance sheet and financial longevity would be in a far better state.

Selling every vehicle at a loss is not sustainable for the mid/long term. The only reason Tesla has got away with it for some years is because the CEO Musk has been given 'a pass' on just about everything. What happens when the next recession hits, and the capital markets refuse to throw another billion dollars to cover increasing losses?

To be clear, I like the product, the CEO is inspirational (especially for SpaceX and his new Tunnel boring venture), but selling vehicles at a perpetual loss is just plain crazy.

Yours truly remains (disturbingly) in the same bearish bed as GS.