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Despite a recent drop and an investigation into steering issues, Tesla's strong fundamentals, positive technical indicators, and dominant position in the EV industry suggest that the stock is worth holding onto, with the potential for upward movement in the short term and long-term growth opportunities.(Analysis date: August 2, 2023)
Technical Analysis
Tesla, Inc. (TSLA) closed at $254.11 on August 2, 2023, dropping by 2.67% from its previous close. The day's trading range was between $250.49 and $259.52, lower than the year’s high of $314.67 and higher than the year's low of $101.81. The trading volume was 101.07 million, less than the average volume of 134.85 million, suggesting less interest from traders.
The technical indicators provide mixed signals. The Relative Strength Index (RSI) is at 38, approaching the oversold level of 30, which could indicate a coming price rebound. However, the stock's MACD (3-month) at 4.34 indicates underlying strength, implying a possible bullish reversal. Moreover, TSLA is trading slightly above its 50-day moving average of $248.39 and significantly above its 200-day moving average of $195.11. This indicates a steady uptrend in the long-term despite the recent drop.
Fundamental Analysis
Tesla’s fundamentals are relatively strong. The Earnings Per Share (EPS) is reported to be $3.08, which indicates the company’s profitability. However, the Price-to-Earnings (PE) ratio of 82.5 is quite high compared to the industry average, hinting that the stock may be overvalued.
Tesla's market cap is a whopping $805.40 billion, which is a testament to its robust investor confidence and market positioning. With 3.17 billion shares outstanding and a stable discounted cash flow (DCF) of $260.49, the prospects look promising.
However, it's essential to factor in recent news. Tesla is under investigation by the US National Highway Traffic Safety Administration over reported steering issues which could impact around 280,000 cars. This could potentially impact Tesla's financials and, consequently, its stock price if the issues result in significant unforeseen costs or damages to Tesla's brand image.
On the other hand, recent news also highlights Tesla's dominance and growth in the EV industry and compares it favorably against competitors. Despite challenges, Tesla's EV sales remain strong, emphasizing its market leadership.
Stock Price Prediction
Factoring in the above data and the target consensus figure of $285.6, the stock could potentially gain in the upcoming trading sessions. It's also worth noting the target high and low figures. With a significantly high potential target of $526.67 and a low of $130, the stock exhibits a high degree of volatility and opportunity for both risk and reward.
Considering this and assuming no drastic changes in market conditions or company-specific news, for the next trading day, August 3, 2023, Tesla’s stock price might experience slight upward movement, edging closer to the 50-day moving average. For the upcoming week, provided the investigation does not yield negative results, the company could see a positive uptrend, potentially reaching the target consensus figure.
Evaluation
Despite the short-term challenges posed by the investigation, Tesla's long-term growth prospects in the EV industry, its strong fundamentals, and the positive technical indicators suggest the stock is worth holding onto for now. If the next earnings announcement due on 10/17/2023 maintains or surpasses the current EPS, and the company continues to perform well in terms of sales growth and market leadership, the stock could head higher over the long run.
Still, investors must monitor the progress and outcome of the steering issues investigation, as any potential recalls or negative findings could impact the stock negatively.
Given the above analysis, Tesla's stock is rated as a HOLD.
