Tesla, Inc. (NASDAQ:TSLA) is struggling in 2019

Tesla, Inc. (NASDAQ:TSLA) is struggling in 2019

Tesla, Inc. (NASDAQ:TSLA) is struggling in 2019

The glory days for Tesla (NASDAQ:TSLA) may be approaching an end. For the last few years, the company enjoyed strong sales with barely any advertising. The stock market and Tesla customers and adherents admired CEO Elon Musk for the advancements he brought to the electric vehicle market. That translated to a lot of positive sentiment for TSLA stock.

But the positive momentum is shifting. The end of subsidies to Tesla buyers, slow sales in China and supply constraints are hurting 2019 sales. Plus, shares of fossil-fuel based automobile makers are rebounding. Investors may have rotated out of their Tesla holdings and into General Motors Company (NYSE:GM) or Ford Motor Company (NYSE:F), both of which are up over 15% year to date.

All of these negative developments may send TSLA stock to new lows in the coming weeks.

Negative Developments for TSLA Stock

The EV subsidy in the U.S. is the risk of getting abolished immediately if U.S. President Donald Trump has his way. Congress is trying to change that by drafting a law that would extend the tax rebates. Currently, Tesla and GM both exceeded the current limit of 200,000 subsidized EV. Congress wants the limit increased to 400,000, giving buyers a tax credit worth $7,000.

So far, markets are not betting the government will pass a subsidy extension. Shares of Tesla have already fallen 18% in 2019. And with 23% of the share float short, many investors seem to believe its underperformance could accelerate.

Tesla announced a Model Y on March 14, an event that would have sent the stock higher in past years. This time, markets did not care much for this crossover model — the stock price certainly didn’t celebrate. This is despite the fact that the crossover and SUV segment is the hottest sector in the automotive space.

Instead, market participants seem to dwell on how the company failed to live up to the Model 3 promises. The Model 3 was supposed to come out on time, sell for $30,000 on average and get produced in sufficient numbers to meet demand. Instead, the car has been plagued with output and deliveries struggles.

Logistically, if Tesla has Model 3 production issues, where will Model Y production take place?

Competition, Debt Could Hamper Tesla Stock

With premium brands like BMW, Mercedes-Benz and Audi vying for market share in the CUV space, the Model Y will compete with Audi e-Tron, BMW iNEXT, and Mercedes-Benz EQ. Jaguar’s I-PACE has at least three configurations for consumers to choose from.

This may help explain TSLA stock’s slowing unit sales, and slowing unit sales hurt cash flow, which Tesla needs to service its debt. Its debt/equity ratio currently stands at 2.4x. This is still better than GM’s, at 2.7 times, or Ford, at 4.3 times. But the difference between it and GM or Ford is that the latter has plenty of revenue and strong cash flows. TSLA stock trades at 24 times FCF, compared to 8.6x for Ford and 13x for GM stock.

Despite the elevated debt levels, liquidity is a remote concern at this time because Tesla may sell shares or debt on the open market. Historically, demand for either is strong, so investors need not worry about its liquidity at this time. Besides, even though sequential unit sales slowed, year-over-year sales are still up 110% (63,000 deliveries, compared to 29,000 the year before).

Overall, the bias in prices is: Downwards.

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

The projected upper bound is: 293.64.

The projected lower bound is: 246.81.

The projected closing price is: 270.23.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 25 white candles and 25 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 62.7886. This is not an overbought or oversold reading. The last signal was a sell 9 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 45.70. 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 151 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 -36. This is not a topping or bottoming area. The last signal was a buy 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 sell 4 period(s) ago.

Rex Takasugi – TD Profile

TESLA INC closed down -2.130 at 271.230. Volume was 39% below average (neutral) and Bollinger Bands were 45% narrower than normal.

Open High Low Close Volume___
274.750 274.790 268.535 271.230 5,126,468

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

Moving Averages: 10-period 50-period 200-period
Close: 271.14 286.23 309.78
Volatility: 58 51 74
Volume: 9,915,465 8,832,792 9,251,512

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 12.4% below its 200-period moving average and is in an downward trend. Volatility is low as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of TSLA.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on TSLA.O and have had this outlook for the last 4 periods.

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