Tesla Inc.’s shares are now “dramatically” overvalued and investors thinking of raising their holdings in the company ahead of its impending addition to the S&P 500 Index should not, JPMorgan analyst Ryan Brinkman wrote in a note on Wednesday.
The analyst pointed out that in the past two years Tesla shares have risen over 800%. Analysts have raised their price targets by about 450%, and also simultaneously lowered their earnings estimates for the company for the years 2020 through 2024. This data is “strongly suggestive of the idea that something apart from the fundamentals (speculative fervor?) is driving the shares higher,” Brinkman added.
Brinkman raised his price target on Tesla to $90 from $80, citing the $5 billion at-the-market offering announced on Tuesday, and maintained the sell-equivalent rating on the stock. According to Bloomberg data, investors who followed Brinkman’s recommendation received a negative 867% return in the past year.
Analysts on an average have a price target of about $364 on Tesla. The company’s stock dropped as much as 2% to $636.63 in New York on Wednesday.
Shares of the electric vehicle maker have been on an incredible rally this year, ever since its fourth consecutive quarterly profit earlier this year raised the possibility of the company getting included in the S&P 500 Index. Investors’ enthusiasm only accelerated further after the decision was formally announced last month.
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.
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 484.51.
The projected upper bound is: 661.57.
The projected lower bound is: 554.81.
The projected closing price is: 608.19.
A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 white candles.
An engulfing bearish line occurred (where a black candle’s real body completely contains the previous white candle’s real body). The engulfing bearish pattern is bearish during an uptrend (which appears to be the case with TESLA INC). It then signifies that the momentum may be shifting from the bulls to the bears.
If the engulfing bearish pattern occurs during a downtrend, it may be a last engulfing bottom which indicates a bullish reversal. The test to see if this is the case is if the next candle closes above the bottom the current (black) candle’s real body.
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.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 79.8762. This is not an overbought or oversold reading. The last signal was a sell 0 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 65.29. This is not a topping or bottoming area. However, the RSI just crossed below 70 from a topping formation. This is a bearish sign. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 0 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 15 period(s) ago.
Rex Takasugi – TD Profile
TESLA INC closed down -45.400 at 604.480. Volume was 100% below average (consolidating) and Bollinger Bands were 136% wider than normal.
Open High Low Close Volume 653.690 654.320 588.000 604.480 107,427
Technical Outlook Short Term: Overbought Intermediate Term: Bullish Long Term: Bullish
Moving Averages: 10-period 50-period 200-period Close: 596.95 467.64 292.88 Volatility: 75 69 109 Volume: 43,028,824 38,911,824 69,935,360
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.
TESLA INC is currently 106.4% above its 200-period moving average and is in an upward trend. Volatility is 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 14 periods. our momentum oscillator has set a new 14-period low while the security price has not. This is a bearish divergence.