Tesla, Inc. (NASDAQ:TSLA) investors question the strength of demand for its product lines

Tesla, Inc. (NASDAQ:TSLA) investors question the strength of demand for its product lines

Tesla, Inc. (NASDAQ:TSLA) investors question the strength of demand for its product lines

Electric-car maker Tesla Inc. delivered sharply fewer vehicles to customers in the first three months of the year, raising questions about the strength of demand for its product lines as it ramps up assembly of the newest sedan.

The Palo Alto, Calif., company said Wednesday that it delivered about 63,000 vehicles to customers during the first quarter, a 31 percent drop from the previous quarter. The most dramatic drop-off was for Tesla’s highest-profit-margin vehicles, its Model S sedan and Model X SUV, which saw combined deliveries fall 56 percent from the previous quarter.

Tesla delivered 50,900 newer Model 3 cars and 12,100 older-model S and X vehicles in the first quarter. In the previous quarter, the company delivered 90,700 total vehicles to customers, including 63,150 Model 3 cars and 27,550 Model S and X vehicles.

The first-quarter deliveries fell short of what Wall Street had expected. Analysts polled by FactSet before Wednesday’s news expected Tesla to deliver 76,000 vehicles during the first quarter, including 54,600 Model 3s.

The first-quarter numbers were partly affected by the decreasing federal tax credits available for electric-car purchases, which pulled deliveries into the fourth quarter, Tesla said. But the decline also came despite the company cutting prices and offering incentives on some models.

The numbers were “shockingly bad,” said Mark Spiegel of hedge fund Stanphyl Capital Management, which holds a significant short position in Tesla, meaning the firm is betting on the company’s stock price falling.

“The biggest problem with Tesla is just massive competition from established companies that know how to build high-quality cars profitably,” he said.

Overall, the Elon Musk-led company produced 77,100 vehicles in the first quarter. Of those, 62,950 were Model 3s. During the previous three-month period that ended in December, Tesla built 86,555 vehicles, including 61,394 Model 3s.

Tesla has staked its future on widespread demand for the Model 3, which has price points lower than its other luxury vehicles.

Shifting sales to a lower-margin product could hurt Tesla’s already stressed bottom line. The company signaled as much in its Wednesday release, saying: “Because of the lower than expected delivery volumes and several pricing adjustments, we expect Q1 net income to be negatively impacted. Even so, we ended the quarter with sufficient cash on hand.”

Tesla had warned of a temporary U.S. sales slump. The Model 3s that would otherwise go to eager U.S. customers instead were shipped to Europe and China, according to the company.

Disorganized delivery in Europe and China hurt sales, analysts said. But Tesla skeptics believe the fundamental problem is flagging demand.

The company has good reason to favor Europe and China right now. Model 3s were shipped to both markets for the first time this quarter. A number of higher-end electric cars from established carmakers in Europe are now hitting the market, and Tesla can’t afford to wait. In China, Tesla must prime the market before it begins building cars there for local consumers, which it plans to do later this year in a factory it’s building outside Shanghai.

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

The projected upper bound is: 298.71.

The projected lower bound is: 250.55.

The projected closing price is: 274.63.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 9 white candles and 1 black candles for a net of 8 white candles. During the past 50 bars, there have been 29 white candles and 21 black candles for a net of 8 white candles.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

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 41.8722. This is not an overbought or oversold reading. The last signal was a sell 1 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 46.00. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 143 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 -17. This is not a topping or bottoming area. The last signal was a sell 1 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 6 period(s) ago.

Rex Takasugi – TD Profile

TESLA INC closed up 7.180 at 274.960. Volume was 56% above average (neutral) and Bollinger Bands were 33% narrower than normal.

Open High Low Close Volume___
269.860 276.100 266.110 274.960 13,038,257

Technical Outlook
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 277.11 291.92 312.72
Volatility: 65 53 74
Volume: 9,738,880 8,854,897 9,260,657

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 12.1% below its 200-period moving average and is in an upward trend. Volatility is Our volume indicators reflect volume flowing into and out of TSLA.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on TSLA.O and have had this outlook for the last 0 periods.

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