What a tough year it’s been for Tesla (NASDAQ:TSLA). Unlike many stocks so far in 2019 or the overall markets in general, Tesla topped out in January and has been struggling ever since. While the Nasdaq is up 18.5% year to date, TSLA stock is down 35%. Is the move an overreaction or is the decline just getting started?
Through the first quarter, it was tough run for Tesla. But the charts didn’t start to really break down until April. For years, Tesla bulls have seen shares rebound higher each time they test down into range support near $250 (we’ll get to the levels in a moment). When that support gave way though, a flood of selling hit the stock.
Lower-than-expected Q1 deliveries and no profitability suddenly sent investors into a panic. Will it continue or is TSLA stock set to stabilize?
Trading TSLA Stock
On the one-year daily chart above, only two marks really matter: range support and channel support.
Labeled “1” above, channel support had buoyed TSLA stock as it continued to trend lower. Channel resistance teamed with various moving averages to squeeze Tesla down. This downward channel took hold in December and was in play until May when the bottom finally fell out.
Lasting longer than the downtrend, though, was range support, marked on the chart with a blue box, it’s been in place for years. On the chart, you can see it give a lift to TSLA stock in Q3 and Q4 2018, as well as in March 2019.
Action in May, though, was the most telling (purple arrow). TSLA stock broke below range support and on the ensuing rebound, acted as resistance to the stock. That was alarming for longs and gave investors the only signal they really needed in Tesla stock at the time. InvestorPlace readers were prepared for that possibility and hopefully bulls were able to dodge plenty of heartache as a result.
So what now?
TSLA stock lost channel support, but reclaimed that mark this week. It also hurdled the 20-day moving average. Those are two bullish developments, but Tesla still has a long way to go before being a solid buy-the-dips candidate.
The real game changer could be the fall-out from yesterday’s shareholder meeting. Shares were up almost 2.5% in premarket trading at 6:15 a.m. EDT today.
As it looks like investors are seeing a positive takeaway, sending the shares higher. In this case, there are two levels to watch. First is the 50-day moving average at ~$237. Above that, and channel resistance and prior range support near $250 will be on the table.
Bottom Line on Tesla Stock
So what do we make of this volatile name — is it a buy or a sell? Above $207 and it’s hard to be a seller of Tesla stock from a trading perspective. Below that area and it’s hard to be long. But that said, investors should wait to see how the stock reacts to the shareholder meeting.
For longer-term investors looking at Tesla, being realistic is the most important thing to consider. There’s little question that Tesla makes some of the best electric vehicles in the world. They’re fast, sexy and have a long driving distance. The company has built out a Supercharger Network, has mass production of electric vehicles and has multiple vehicles to choose from.
In short, no other company has achieved what Tesla has done and even the products coming to market today come up short. That’s everyone from BMW, Porsche, Mercedes via Daimler (OTCMKTS:DDAIF), General Motors (NYSE:GM), Ford (NYSE:F) and others.
The problem is that Tesla hasn’t be consistent. The bottom line swings erratically, as does the company’s cash flow. Further, CEO Elon Musk continues to tweet material information that gets him in trouble with the SEC. The company’s execution is questionable as well.
In short, our confidence in Tesla is just too thin. Even as its vehicles, autonomous technology and long-term potential all look promising. In short, let’s see if the shareholder meeting gives the stock some mojo or if saps any bullish momentum that the stock has. Then we can go from there.