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.
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.
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
Disclaimer: Trive South Africa (Pty) Ltd (hereinafter referred to as “Trive SA”), with registration number 2005/011130/07, is an authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act, 37 of 2002. Trive SA is authorised and regulated by the South African Financial Sector Conduct Authority (FSCA) and holds FSP number 27231. Trive Financial Services Ltd (hereinafter referred to as “Trive MU”) holds an Investment Dealer (Full-Service Dealer, excluding Underwriting) Licence with licence number GB21026295 pursuant to section 29 of the Securities Act 2005, Rule 4 of the Securities Rules 2007, and the Financial Services Rules 2008. Trive MU is authorized and regulated by the Mauritius Financial Services Commission (FSC) and holds Global Business Licence number GB21026295 under Section 72(6) of the Financial Services Act. Trive SA and Trive MU are collectively known and referred to as “Trive Africa”.
Market and economic conditions are subject to sudden change which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. Trive Africa and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered. Please consider the risks involved before you trade or invest. All trades on the Trive Africa platform are subject to the legal terms and conditions to which you agree to be bound. Brand Logos are owned by the respective companies and not by Trive Africa. The use of a company’s brand logo does not represent an endorsement of Trive Africa by the company, nor an endorsement of the company by Trive Africa, nor does it necessarily imply any contractual relationship. Images are for illustrative purposes only and past performance is not necessarily an indication of future performance. No services are offered to stateless persons, persons under the age of 18 years, persons and/or residents of sanctioned countries or any other jurisdiction where the distribution of leveraged instruments is prohibited, and citizens of any state or country where it may be against the law of that country to trade with a South African and/or Mauritius based company and/or where the services are not made available by Trive Africa to hold an account with us. In any case, above all, it is your responsibility to avoid contravening any legislation in the country from where you are at the time.
CFDs and other margin products are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how these products work and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. See our full Risk Disclosure and Terms of Business for further details. Some or all of the services and products are not offered to citizens or residents of certain jurisdictions where international sanctions or local regulatory requirements restrict or prohibit them.