Sign InTesla Stock Shows Volatility Amidst Price Drop, RSI Points to Potential Price Rise
Summary
On August 14, 2023, Tesla stock exhibits a volatile pattern with a decrease in price, but with oversold conditions and potential for a future price rise, some upward correction may be possible, though the high PE ratio, impending EV price battle in China, and news-driven volatility should be considered by investors.
Fundamental Analysis
Tesla Inc. is a prominent player in the electric vehicle and clean energy sector, listed on the Nasdaq exchange. Bearing a last close price of $239.76 on August 14, 2023, Tesla stock marked a decrease of $2.89 (-1.19%). Despite the recent drop, the stock exhibited a volatile pattern for the trading day, with a high of $240.66 and a low of $233.76.
The company's market cap stands at $759.92 billion with approximately 3.17 billion outstanding shares. Consistent trade volumes of the stock denote the interest of the investors, though the volume of trade in the last session (98.23 million) was below the average volume (133.42 million).
From a valuation perspective, Tesla's stock has a price-earnings (PE) ratio of 77.84, with an earnings per share (EPS) of $3.08. The significantly high PE suggests investors anticipate high growth prospects but it makes the stock relatively expensive compared to its earnings.
Tesla's most recent price falls toward the lower end of its 52-week range - the year's high and low being $314.67 and $101.81 respectively. Target price estimates placed by analysts suggest a median value of $275 with a consensus view skewing towards "Buy."
Tesla seems to be in the news due to a price reduction in its China markets, potentially igniting an EV price war. Additionally, there are mixed moves from institutional investors, with Appaloosa LP exiting their position in Tesla while The Westly Group's Managing Partner discussing their continued interest in the company.
Technical Analysis
The stock's relative strength index (RSI14) stands at 31, signifying an oversold condition and may hint at the potential for a future price rise. Tesla's Moving Average Convergence Divergence (MACD) value stands at -8.50, suggesting bearish momentum.
Examining the trendlines, the stock's current price resides beneath both the 50-day moving average of $257.95 and the 200-day moving average of $196.50 demonstrating a recent bearish sentiment.
Tesla's immediate support and resistance levels are $224.57 and $241.05 respectively. Breaking either of these could mark a significant move in the respective direction in the coming trading sessions.
Outlook and Recommendations
Anticipating the next trading day and week, given the stock's oversold RSI status and price deflation beyond the moving averages, some upward correction may be possible. Still, this remains contingent upon the stock breaking the immediate resistance level. The discounted cash flow (DCF) valuation also supports this view, pricing the stock slightly higher at $246.14.
Given the fundamental characteristics and recent technical indications, the analyst categorises this stock as a 'Hold.' The decision hinges on key factors like the company's continued market leadership, growth prospects, and recent oversold status (potentially heralding a price correction). Conversely, the high PE ratio might temper expectations for immediate returns while the impending EV price battle in China might apply further price pressures. Being subject to news-driven volatility, investors should closely follow forthcoming announcements including its earnings announcement on October 16, 2023.
