Tesla Stock Breached Support. This Is Where It's Headed

Dow Jones04-16

Al Root

Tesla stock fell Tuesday after shares closed below an important level of support on Monday. The recent action leaves investors wondering where shares are headed as the company's first-quarter earnings report approaches.

Tesla dropped 5.6% Monday, losing almost $10 and closing at $161.48 following news that Tesla would lay off more than 10% of its 140,000-strong workforce. The S&P 500 and Nasdaq Composite fell 1.2% and 1.8%, respectively.

Shares fell 2.7%, closing at $157.11 on Tuesday, while the S&P 500 and Nasdaq dropped 0.2% and 0.1%, respectively. Tesla stock hadn't traded below $160 since May 2023.

The declines leave Tesla stock down about 37% year to date. Shares are now trading for about 44 times the per-share earnings the EV maker is expected to produce in 2025. They started the year trading for about 65 times, according to FactSet.

The drop Monday took Tesla below a so-called technical support level at about $164 a share. Breaking through a support level -- a price that investors have been willing to buy in the past -- leaves investors looking for the next level where declines might stop. Fairlead Strategies co-founder Katie Stockton said $148 represents another level of support.

Stockton and other technical analysts don't make fundamental calls on stocks. They look at price charts to suss out where shares can go over the short and medium term. Technical analysts such as Stockton use moving averages, percentages of prior gains, and other data to figure out what's coming next for a particular stock.

Shares might drift toward the $148 level without something significant to change investor sentiment. Earnings are a factor that could change the picture, for better or for worse.

Tesla is due to report first-quarter results on April 23 after the market closes. It likely would take reassurance from CEO Elon Musk that growth will return to send the stock higher.

Tesla delivered about 387,000 vehicles in the first quarter of 2024, down almost 9% year over year, missing the lowest Wall Street estimates by roughly 20,000 units. The miss led Wall Street analysts to cut 2024 delivery estimates to about 1.8 million units, flat with 2023.

"I'd love [Musk] to give a candle of hope...a ray of light for [profit margins]," says Canaccord analyst George Gianarikas.

Lower deliveries and falling EV prices have pressured profit margins. Wall Street expects operating profit margins in the first quarter to come in at about 6%, according to FactSet, down from 11% in the first quarter of 2023 and from 19% in the first quarter of 2022.

"People need hope," added Gianarikas. He rates Tesla stock at Buy with a $234 price target.

Write to Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

April 16, 2024 16:16 ET (20:16 GMT)

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

All in Tesla
04-16
All in Tesla
It's an opportunity if you're looking to hold long term
MIe
04-16
MIe
Buy tesla dip
ninjainvest
04-16
ninjainvest
It hasnt breach support, $152 is a stronger support, if $152 is breached, next support will be around $102.
MIe
04-16
MIe
Tesla dip buy
FattAgain69
04-16
FattAgain69
Support and resistance levels are subjective depending on how you draw the lines. 164 does not look like a strong support/resistance level no matter how I read the charts. Prefer to look at the 10s for support and resistance, aka 150, 160, 170 where the options strike prices are at.
- blimpy:
  👍
- glitzy:
  I hear you on the subjectivity of support and resistance levels.
Guavaxf30
04-16
Guavaxf30
"Fairlead Strategies cofounder Katie Stockton said $148 a share represents another level of support." Interesting she is calling $148 as the next support. I was more generous at $150. But these are not exact sciences. What is especially interesting is the mention if ket catalyst. The earnings announcement on yhe 23rd of April will be a Major determining event. I am expecting a really bad result. Just reading all recent events that has taken place. And especially watching Elon Musk's actions. But the really firm indication is the 10% headcount cut. That is saying everything.....