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Tesla
Ticker: NASDAQ:TSLA
Price: $521.85
Tesla
Inclusion in an index isn’t just about prestige – there is a palpable market reaction that comes with it. Tesla stock is up roughly 19% on the news, and there is further anticipation of buying once all the index-tracking funds update their S&P holdings. This is positive news for Tesla investors and perhaps a sign that the company is finally transitioning to be a more traditional automaker in the sense that it is going to make money selling cars rather than regulatory credits (although credits still play a role in the profits).
To get to this point, Tesla had to post four quarters of profits, criteria introduced by the S&P selection committee following the inclusion of Yahoo Inc. in December 1999, just before the internet bubble burst. Tesla has managed five before inclusion, perhaps signaling a reluctance on the part of the S&P committee. More than a few market pundits have pointed to the worrying symmetry between Yahoo’s and Telsa’s entries into the S&P.
Tesla’s Unreal Valuation
Tesla is a tech company for all intents and purposes, despite being an automaker. Tesla currently trades at a trailing P/E ratio of over 900 and a forward P/E ratio of over 120. Even with newfound profitability, the market has run Tesla up an incredible amount. The company has a market cap of $460 billion – more than several of the world’s three largest carmakers combined.
This is hard to credit, as Tesla has yet to sell 500,000 vehicles in a year, although it is on pace to hit that mark this year. Toyota Motor Corporation (TM), for example, sold over 830,000 Toyota vehicles in September (in what will be a down year) and will probably sell more of its Daihatsu sub-line of vehicles this year than Musk sells Teslas.1
Toyota trades at P/E ratio of 14 and has a market cap of under $200 billion.
We can talk about the Toyota-to-Tesla comparison being apples-to-oranges given Tesla’s tech company valuation, but that doesn’t remove the question of how Tesla the company will ever catch up to Tesla the stock. This is even worse because a whole bunch of passive investors are going to be grabbing on to this rocket whether they want to or not through exchange-traded funds (ETFs) tracking the S&P 500.
Moreover, the market is acting like Tesla has sole control over an electric automotive future. That may have been true in the past, and the company may have the edge in battery technology, but all the other global carmakers have EVs planned or already on the market, and they are rapidly iterating to catch up. Given their large, well-developed supply and sales networks, it is hard to imagine that the established automakers will remain way behind forever
Business Summary
Tesla, Inc., formerly Tesla Motors, Inc., designs, develops, manufactures and sells fully electric vehicles, and energy storage systems, as well as installs, operates and maintains solar and energy storage products.
The Company operates through two segments: Automotive, and Energy generation and storage.
The Automotive segment includes the design, development, manufacturing, and sales of electric vehicles.
The Energy generation and storage segment includes the design, manufacture, installation, and sale or lease of stationary energy storage products and solar energy systems to residential and commercial customers, or sale of electricity generated by its solar energy systems to customers.
The Company produces and distributes two fully electric vehicles, the Model S sedan and the Model X sport utility vehicle (SUV). It also offers Model 3, a sedan designed for the mass market.
It develops energy storage products for use in homes, commercial facilities and utility sites.
Price Performance
Relative Valuation
Technical Indicators
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
By the way, prices are vulnerable to a correction towards 403.51.
The projected upper bound is: 574.34.
The projected lower bound is: 473.45.
The projected closing price is: 523.89.
Candlesticks
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 24 white candles and 26 black candles for a net of 2 black candles.
Momentum Indicators
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
Stochastic Oscillator
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 89.3280. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 10 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 71.52. This is where it usually tops. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 57 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 160.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 11 period(s) ago.
MACD
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 4 period(s) ago.
Rex Takasugi – TD Profile
TESLA INC closed up 32.240 at 521.850. Volume was 100% below average (consolidating) and Bollinger Bands were 24% wider than normal.
Open High Low Close Volume 503.500 526.000 501.790 521.850 178,530
Technical Outlook Short Term: Overbought Intermediate Term: Bullish Long Term: Bullish
Moving Averages: 10-period 50-period 200-period Close: 449.48 430.07 269.39 Volatility: 80 74 109 Volume: 34,904,952 45,851,320 71,926,144
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
Summary
TESLA INC is currently 93.7% above its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term.
Our volume indicators reflect moderate flows of volume into TSLA.O (mildly bullish). Our trend forecasting oscillators are currently bullish on TSLA.O and have had this outlook for the last 3 periods. Our momentum oscillator is currently indicating that TSLA.O is currently in an overbought condition.