Regardless of the reason for the decline in stocks, the stock chart seems to be more pain ahead.
The stock (stock ticker: TSLA) closed down another 6.8% in Monday’s trading, at $167.87. The
They were as low as 0.4% and 1.1%, respectively. Monday’s plunge sent Tesla shares down about 52% so far this year.
Shares have fallen in five of the past six sessions and closed at their lowest level since November 20, 2020, when it ended the day at $163.20, according to market data from Dow Jones. Shares are now down 26% so far this month.
Founder of Fairlead Strategies Katie Stockton He is a market technician – he looks at stock charts to determine support and resistance levels for any stock or market. Stockton says there is some support for Tesla stock at $166.
This is not a base call based on how many cars Tesla will sell. Stock charts and stock chart patterns are just a way to learn what fundamentally minded investors think about a stock without knowing any of the basics.
Patterns can be bullish or bearish. When a stock breaks out of a previous range, something good is bound to happen.
This is what happened to Tesla stock in late 2019. The stock exploded. The graph pattern corresponds to when the company started to generate steady profits and free cash flow. Tesla stock is up more than 740% in 2020.
Shares had another strong year in 2021, returning nearly 50%. Shares are now down about 56% from a 52-week high in January 2022 of more than $400 a share. The chart is telling investors that something is off.
It could just be the state of the global economy. The Nasdaq Composite Index is down about 32% from its 52-week high. It could also be price cuts for electric cars in China, which has investors worried about demand there.
Shares of the Chinese electric car maker
) are down 68% so far this year and are down 47% over the past three months. Shares fell another 4.3% on Monday, closing at $10.02.
Whatever it is, Tesla’s stock chart still looks flabby. Stockton sees $150 as the next leg down if the shares break $166.
John Rock, head of technical strategy at 22V Research, says the stock could drop to $100 in the market. Again, his advocacy is not based on the essentials. He is reading the chart.
That’s quite a drop, but the problem with value-rich growth stocks is that after the growth buyers freak out, the value buyers don’t arrive for a while. Value buyers are the ones who are willing to jump into stocks because the price is so attractive, regardless of what’s going on in the broader economy.
Tesla stock is trading at about 31 times estimated 2023 earnings. This is the lowest percentage of PE since the depths of the pandemic. But the S&P 500 is trading at 17 times estimated 2023 earnings.
At the Roque’s $100 price tag, the shares will trade for 17 times less than the broader market. That’s not how he reached his goal, but getting a company to grow like Tesla at a price below the market multiple would be too tough for many investors to miss out on.
Tesla sales are expected to grow about 44% in 2023 compared to 2022.
Whether or not Tesla stock ever gains is anyone’s guess. And you can’t know exactly what level Tesla stock has to reach to be attractive enough no matter what problems the company or industry is facing. But something needs to change, in the market or for the company, to break Tesla’s stock funk.
Write to Al Root at [email protected]
“Infuriatingly humble analyst. Bacon maven. Proud food specialist. Certified reader. Avid writer. Zombie advocate. Incurable problem solver.”