Tesla’s (NASDAQ: TSLA) share price faces headwinds on multiple fronts, with the report that the company recently missed delivery estimates by a significant margin in Q1 2024, with sales down 8.5% year-over-year, adding pressure on the share. This shortfall comes despite a production increase, suggesting potential weak demand. Increased competition from established automakers entering the EV space further threatens Tesla’s market share.
Adding to the pressure, higher interest rates and potential brand damage from CEO Elon Musk’s social media activity could further dampen consumer enthusiasm. However, some analysts remain optimistic. Tesla’s upcoming earnings report (April 23rd) and the potential for its Full Self-Driving technology to be a near-term catalyst are factors to consider. The company regaining the top EV seller spot globally, surpassing BYD, is also a point of note.
Technical Analysis
The 4-hour technical analysis paints a bearish picture. Tesla’s share price is currently trading within a descending channel, with the 50-SMA (blue line), 100-SMA (orange line), and 200-SMA (red line) all sloping downwards. This indicates a downtrend and the potential for further price decline. The RSI (Relative Strength Index) sits at 39.96, below 50, further highlighting bearish momentum. A sustained move lower could see the price fall towards the 78.60% Fibonacci retracement level of $144.07. A break below this level, with significant volume, could expose the four-year low of $101.81.
However, there’s a possibility for a reversal. Renewed buying pressure could see the price rise towards the 61.80% Fibonacci retracement level, with a break above this level could lead to a test of the 50% level at $200.55. A sustained surge past this point could signal a bullish reversal, with the 38.20% ($223.85) and 23.60% ($252.68) Fibonacci retracement levels potentially acting as the next upside targets.
Summary
Tesla’s outlook is clouded by weak deliveries, competition, and rising interest rates. Technically, the charts suggest a downtrend, with $144.07 and potentially even $101.81 as downside targets. However, bullish hopes hinge on the upcoming earnings report and the potential for Full Self-Driving technology. If the bulls regain control, $200.55 could be the next test, with a possibility of a further rise towards $223.85 and $252.68.
Sources: TradingView, Simply Wall Street, MarketWatch, Dow Jones Newswire, Benzinga.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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