As the recent recovery trade fades, the Tesla stock price slumped in the past two straight days. TSLA shares are trading at $740, which is sharply lower than its all-time high of $1,244. In addition, the company’s market cap has fallen to about $767 billion, meaning that investors have lost over $350 billion in the past few months.
Tesla and other electric car companies have been under pressure in the past few months. The cost of key parts like batteries has surged, meaning that these companies are finding it difficult to expand their margins. Other costs that have risen are wages, chips, and steel. At the same time, there are concerns that the rising inflation will slow demand for vehicles.
Meanwhile, Tesla has been struggling because of the lockdowns in Shanghai. First, the company was forced to shut down its plant in its biggest market as the number of Covid-19 cases surge. Now, with the country reopening, analysts expect that the company will benefit in the coming months.
Investors are still concerned about Tesla’s growth as inflation keeps rising, and wages remain under pressure. As such, as we have seen with companies like Nvidia, Netflix, and Meta Platforms, it reaches a point where investors are interested in seeing growth for highly valued companies.
A closer look shows that there are some similarities between Tesla and Netflix. For example, they are big disruptors that changed their industries. Further, they have experienced a lot of growth lately. At the same time, the are all battling intense competition, with EVs now becoming a commodity. Still, Tesla has some potential catalysts, including the upcoming semi and pickup truck launches.
The daily chart shows that the situation is not looking very good for Tesla. For one, it has formed a death cross, which happens when the 200-day and 50-day moving averages make a crossover. As a result, it is one of the most accurate bearish patterns. At the same time, the MACD remains below the neutral level. As shown, the stock has formed a triple-top pattern that is shown in blue.
Therefore, the recent rebound seems like a fakeout, meaning the stock will likely have a bearish breakout soon. I believe the stock will likely drop to about $500 this year. A move above the death cross intersection at $877 will invalidate the bearish view.
This post was last modified on Jun 02, 2022, 07:34 BST 07:34