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News Digest / Analysis & Ideas / Tesla Stock Analysis: Bearish Signals, Oversold Territory, and Price Movements

Tesla Stock Analysis: Bearish Signals, Oversold Territory, and Price Movements

Samuel Brooks
07:58am, Thursday, Mar 21, 2024

Photo by Tesla Fans Schweiz on Unsplash

Technical Analysis

From the provided data on Tesla, Inc. (TSLA), the stock closed the previous trading session at $175.66, marking a 2.53% increase. It oscillated between a low of $170.82 and a high of $176.25 during the day. Notably, the stock is presently trading below its 50-day and 200-day moving averages ($194.61 and $234.04, respectively), signaling bearish sentiment in the near term. The Moving Average Convergence Divergence (MACD) at -5.83 further supports this view, indicating downward momentum. Additionally, with an RSI (Relative Strength Index) of 31, the stock is edging towards the oversold territory, suggesting potential buying pressure might emerge soon.

Support and resistance levels are identified at $173.8 and $181.06, respectively, which will be crucial in guiding the stock's short-term movements. The Average True Range (ATR) stands at 4.52, highlighting a relatively high level of volatility in recent trading sessions.

3-month chart of TSLA at StockInvest.us

Fundamental Analysis

Tesla’s market cap stands at approximately $559.44 billion, reflecting a significant position in the market, though its Price-to-Earnings (PE) ratio of 40.85 indicates a premium valuation relative to earnings. The earnings per share (EPS) of 4.30 suggest profitability, but investors may scrutinize the comparably high PE ratio for growth sustainability. The forthcoming earnings announcement on April 17, 2024, will be a critical event for investors to reassess the company's financial health and future outlook.

The recent news of Tesla increasing the prices of its Model Y in China due to demand and competition is indicative of strategic pricing power and geographical market penetration, potentially bolstering revenue growth. However, the tragic incident involving the Foremost Group CEO in Texas and the resistance against the IG Metall Union in Germany introduce elements of social and labor-related challenges that the company needs to navigate carefully.

Analyst consensus leans towards a 'Buy' with 23 analysts recommending a buy, 7 holding, and 5 suggesting a sell. The target consensus of $273.52, with a high estimate of $526.67 and a low of $85, indicates a wide range of expectations, reflecting uncertainty and high volatility in forecasts.

Predictions and Intrinsic Value

For the next trading day, given the closeness to the oversold territory and recent positive price movements, a mild recovery or stabilization around the $175-180 range might be expected, considering no significant market-wide negative news. Over the upcoming week, investors will likely watch for any developments related to Tesla's price adjustments, unionization events in Germany, and general market sentiment to guide further.

The discounted cash flow (DCF) analysis presents an intrinsic value significantly lower than the current market price, suggesting that Tesla’s stock might be overvalued at current levels. Investors focused on long-term value might find this discrepancy worrisome.

Overall Evaluation

Given Tesla's market position, innovative edge, and expansion efforts balanced against its current technical indicators, valuation concerns, and external challenges, the stock is currently evaluated as a 'Hold'. Investors should closely monitor upcoming earnings, impact of price adjustments in key markets, and resolutions to potential social and labor issues. Those with a higher tolerance for risk and a long-term investment horizon may view the current price levels as a moment to accumulate, anticipating future growth despite short-term volatility and bearish indicators.

About The Author

Samuel Brooks