The Tesla stock price has been in a strong bearish trend in the past few months. On Friday, the TSLA shares rose by more than 5.7% after Elon Musk decided to put the Tesla acquisition deal on hold. It is now trading at $769, about 40% below its highest level in 2021. So, is Tesla a good investment, or will it move the Netflix way.
Tesla and Netflix have some similarities. The two companies are market leaders in their industries: EVs and streaming. As a result, the companies experienced rapid growth, which attracted all types of investors. These companies defied valuation metrics, with Tesla achieving a trillion-dollar market cap, making it more valuable than all other automakers combined. Netflix also became a pillar for FAANG stocks.
However, the Netflix stock price has recently plummeted by more than 74% from its all-time high in 2021. The decline accelerated recently when it published weak earnings. Notably, while the company lost subscribers, Disney managed to add new members. This signalled that competition was getting real.
Now, Tesla maintains a high market cap of over $797 billion even as competition in the EV business rises. This competition is coming from startups like Rivian, Lucid, Nio, and Xpeng. It is also coming from companies like Ford, GM, and Volvo. For example, Ford’s F150 Lightning has over 200k reserve orders, and the company was forced to halt reservations.
Therefore, there is a likelihood that the Tesla stock price will go the Netflix way, considering that EVs have become mainstream. And at some point, investors will start caring about this, especially when it starts showing slow growth. Still, Tesla has some positive catalysts above. For example, it will start reporting strong results when it unveils its Tesla Semi, pickup, and roadster products.
In my previous Tesla forecast, I noted that the shares would crash to $750. This view was accurate as the stock dropped to $706.
The 1D chart is not looking good for the TSLA stock price. As shown in green, the company has formed what looks like a triple-top pattern, which is usually a bearish sign. At the same time, the 25-day and 50-day moving averages have made a bearish crossover pattern. The current level is also slightly above the lowest level in March this year.
Therefore, there is a likelihood that the Tesla stock sell-off will continue as bears target the key support level at $682, which was the lowest level last week. As a result, the stop-loss for this trade will be at $850.
This post was last modified on May 16, 2022, 08:37 BST 08:37