Trouble Ahead for Tesla?

Telsa (Ticker Symbol: TSLAWealth Strength IndexTSLA is Moderately Flat and trending Up) the nation’s leading producer of battery-powered automobiles, received two downgrades early this week from major investment research firms. Cowen and Company lowered their price target from $200.00 to $180.00 and the Royal Bank of Canada (RBC) also cut its price target on the automaker, from $245 to $210.  Both price targets are suggesting over 14% moves to the downside from their previous targets.

Cowen analyst Jeff Osborne came out and lowered his forecast for Telsa Model 3  deliveries by 13%.  The Model 3, Tesla’s most affordable automobile, has a reasonable starting price of $35,000.00. This is Tesla’s crucial product that would enable it to reach a mass audience because of its lower price point.  Jeff Osborne also came out and lowered deliveries of Telsa’s Model X and Model S automobiles by 16%. RBC analysts came out and sighted similar notes on weak deliveries which could hurt revenues and margins.

Tesla’s IPO was June 29th, 2010 at $19.00 and as of Wednesday’s close of $274.86, the stock is up over 1300%.  Tesla’s stock has been in the midst of a 7-year long uptrend, reaching an all-time high of $389.61 on September 15th, 2017.  Since then the stock has been in a 2-year horizontal channel, trading between the $240-$388 price levels.

The lower part of the two-year channel comes in at just around $240, which coincides with the 7-year long uptrend.  If Tesla’s stock was to break down through that price channel and trendline, it could open up the possibility of testing one or both of the price target areas mentioned above.  Conversely, If the stock were to hold this uptrend and horizontal channel, investors may look for the stock to move back up through the $300 price level.

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(Chart above courtesy of www.tipranks.com )

Based on a survey of 24 analysts offering 12-month price targets, the average price target for Teslas’s stock is $324.46.  According to that number, the stock is priced at a discount relative to Wall Street’s analysts and could be considered undervalued around current levels near  $274.83.

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(https://news.wealth365.com/wsi/ )

Tesla revealed earlier this month its new Model Y, a compact SUV, that would be within the $35,000 to $55,000 price range. Analysts at Wedbush have a bright outlook for the Model Y,  thinking it could be a “potential game changer and could unleash massive demand” for Elon Musk and Tesla.  Telsa is a smart and innovative company that continues to impress investors across the globe.  As you can see above, Wealth365 Strength Index (WSI) is not indicating a breakout with a reading of 137. Keep your eyes on the WSI to see if Tesla will be breaking down or breaking out from current levels.

 

 


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