Capital.com Research TeamThe latest Tesla stock news that matters
Earnings reports are usually the main driver of long-term trends for a stock. However, these are scheduled and only come up four times a year. In between these periods, other news comes to the fore. Tesla share news events usually border on advances that have been made in its electrical vehicle designs, new licensing and the outlook picture for the product as painted by Elon Musk.
In early February, Tesla shares skyrocketed, with the price rising 36 per cent in two days (February 3 and 4). In fact, the price has doubled between the start of the year and the two days in question. A lot of this move was caused by a rapid change of sentiment around this stock and cemented with a strong earnings report.
In early 2019, Tesla was struggling with the production of its Model 3 car, and CEO Elon Musk shared a personal video in which he voiced his frustrations to the world. Many people shorted the stock then, expecting the project to fail and the stock price to sink with it.
However, the latter part of 2019 saw the company turn a corner. Sales and deliveries went up by double digit figures. New factories are being built in China and Europe. Operational costs were reduced by 7 per cent and cash earnings hit $1bn. These factors triggered a rapid change in sentiment, with huge bets on future price advance. This is what accounted for Tesla’s rapid price increase.
This increase was quite rapid and, in the short term, it is not expected to be sustained. The Tesla stock latest news may also play a part in this. The recent Tesla stock news update has reported that the company would recall 15,000 Model X cars which were produced before October 2016. The recall is being done as a result of an issue with the power-steering system, which could cause potential crashes.
This Tesla share price news update could be responsible for the pullback that has been noticed in Tesla share price action on the day and could have bearish implications for the stock.
What does Tesla price analysis have to say?
The Tesla stock price analysis would start on the monthly chart. The monthly chart for Tesla stock performance shows that it has been in a long-term uptrend, trading at just above $30 in June 2010 and now approaching the $1,000 mark 10 years later. An analysis of the Tesla stock performance chart suggests that most of the uptrending movement occurred in the past one year, as TSLA was in a tight range between 2013 and 2017, and also between 2018 to early 2019.
The weekly chart showcases the medium-term price action and also shows the asset to be in a gradual uptrend from April 2019, until the price spike that occurred in the past month. The spike is quite steep, and technical analysis tells us that such dramatic price hikes are generally difficult to sustain and eventually reverse, to some extent.
Let’s take a look at the weekly Tesla stock chart:
The oscillator (RSI) on the chart is in deep overbought territory, and the active weekly candle has retraced off its highs and is beginning to form a pinbar. The weekly candle has to close to be able to determine whether it has taken the shape of a pinbar or not. A pinbar, combined with the steep price move and the heavily overbought RSI are all signs of an impending reversal. This reversal would have to be confirmed by the formation of a bearish candle for next week such as an engulfing candle.
Here’s what the daily Tesla chart looks like:
The daily chart is ideal for short-term price analysis and also shows an RSI reading in overbought territory as well as the presence of a symmetrical triangle. This triangle was preceded by a doji candle (February 4) which gapped above the previous day’s bullish candle (February 3 candle). The candle which followed the doji was a bearish candle, rounding off a classical evening doji star pattern.
Tesla share price news indicates that the stock is now trading at the $767.29 mark, nearly $200 off its all-time high achieved on February 5. With the price nearly at the apex of the symmetrical triangle, the resolution of this pattern appears imminent. Typically, a symmetrical triangle ends with a bullish continuation, but the technical picture on the daily supports a bearish conclusion to the set up, in which case the triangle would be acting as a topping pattern (rare).
Short to mid-term Tesla price forecast: where to next?
Charles Munger does not believe in Tesla stocks. The 96-year-old vice chairman of Berkshire Hathaway indicated that he would not buy or sell Tesla shares. But not everyone has decided to sit on the fence.
Some analysts have predicted great times ahead for Tesla stocks. ARK Invest has put out a price projection for five years, predicting Tesla to trade at around $7,000 if the company is able to sustain the growth trajectory of the latter half of 2019 and continue to expand its autonomous taxi business.
Ron Baron, billionaire investor, believes that Tesla could generate a revenue of $1tn in a decade. Baron Capital, the hedge fund owned by Baron, is heavily vested in the company and has more than 1.6 million shares it acquired at just under $220 per share.
However, not all analysts are convinced, and they cite safety issues as well as the company’s inability to turn a profit since inception as a key motivation for their stance. Jed Dorsheimer of Canaccord Genuity recently downgraded the stock from a buy to a hold, with a target price of $750. Pierre Ferragu, a research analyst with New Street, has also dropped his “buy” rating to “hold”, and has set a target price of $800.
The markets always move like the waves of an ocean, rising and ebbing with time. Things will not be different for Tesla. Even if Tesla stocks will rise to the moon, there will be periods of pullback and profit-taking which will drive the price lower. And traders need to learn how to ride these waves in whatever direction they might go.
A downside break of the triangle fulfils a lot of what the technical picture on the various time frames are saying. This action could target a support cluster very close to the 600 price level. A further support line at 495.32 (high of January 8 and low of January 16) lies below, and comes into focus if a profit-taking pullback takes Tesla stock price below the initial support.
On the flip side, a bullish continuation above the triangle sends the stock towering towards $1,000 and new record highs. However, this move has to get strength from the fundamental side of the divide. Technical analysis tells us that the height of the base corresponds to the measured move from a breakout. If an upside break occurs, this can provide guidance on where uptrending price could take a breather.
Trade Tesla Inc - TSLA CFD
Join Capital.com to always stay up to date with the latest Tesla stock news and spot the best trading opportunities.
