Tesla Inc (NASDAQ: TSLA), a trailblazer in the electric vehicle sector, faces a tumultuous market landscape marked by a potential four-week downturn in its stock, plunging it into a 5% negative territory for 2024.
The company, amidst a backdrop of a robust Greenback and intensified competition, grapples with formidable challenges. Recent events, including a massive vehicle recall in China due to defects, have exacerbated the strain on Tesla’s market standing, notably as China’s BYD, an electric car behemoth, surged ahead in production, threatening Tesla’s dominance.
While Tesla showcased resilient growth with a record-breaking 484,507 deliveries in Q4, surpassing market expectations, its path was riddled with obstacles. The firm reported slower revenue growth in Q3, marking its most sluggish expansion in three years, alongside concerning dips in profitability metrics. Notably, aggressive price cuts, particularly in China, took a toll on Tesla’s gross profit and margins, down to 17.9% in Q3, in stark contrast to the 25.1% reported the previous year. Amid fierce competition and shifting market dynamics, these factors paint a compelling narrative of challenges and milestones for the iconic electric car manufacturer.
Technical
Tesla’s share price recently embarked on an upward trajectory within an ascending channel, signalling a potential shift in its market dynamics. Originating from the $205.69 mark, an upsurge ensued, fuelled by oversold RSI conditions. However, this momentum met resistance at $263.34 per share, encountering overbought RSI conditions and triggering a subsequent downturn.
Presently, the share price hovers near the 50% Fibonacci Retracement level, poised at a critical juncture. If this level serves as a robust intermediate support, a reversal might unfold, potentially paving the way for a retest of the $263.34 mark, contingent upon sustained upward momentum.
Conversely, a substantial volume-driven breakdown beneath the 50% level could signal prolonged selling pressure. Such a scenario could redirect attention towards the $205.69 level, resonating as a notable point of interest for potential downside movements in Tesla’s stocks.
Summary
Tesla, a pioneer in electric vehicles, confronts a challenging landscape amid a stock downturn and increased competition. Despite achieving impressive Q4 deliveries, hurdles in revenue and profitability metrics persist. The technical outlook suggests a pivotal moment, with the 50% Fibonacci level serving as a critical juncture for the share price’s short-term trajectory.
Sources: Tesla Inc, Reuters, CNBC, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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