Why investors should hope for Tesla, Inc. (NASDAQ:TSLA) to talk about Model 3 demand trends

Why investors should hope for Tesla, Inc. (NASDAQ:TSLA) to talk about Model 3 demand trends

Why investors should hope for Tesla, Inc. (NASDAQ:TSLA) to talk about Model 3 demand trends

With Tesla (NASDAQ:TSLA) set to report its first-quarter deliveries sometime between April 1 and April 3, investors will be watching the update closely. Not only will it give investors insight into how the company’s important Model 3 production-ramp up and global expansion initiatives are faring, but the automaker sometimes uses the update to reveal other views into its business. For instance, in the past, Tesla has talked about demand, vehicle order trends, and even forecasts for order trends. 

Going into Tesla’s first-quarter vehicle delivery update next week, investors should look not just for the number of vehicles delivered but also for an update on order trends for the Model 3. Is demand on the upswing after the launch of Tesla’s long-awaited $35,000 Model 3?

Whether or not the release of Tesla’s most affordable vehicle helped demand or not may be the most important thing to look for in electric-car maker’s update.

Why it matters

Ever since Tesla garnered around 400,000 reservations for the Model 3 within a few months of its initial unveiling, the company has had high expectations for the vehicle’s sales potential. Management’s big expectations are best summed up in comments from CEO Elon Musk in the company’s most recent earnings call: “My best guess for demand of Model 3 worldwide is something — in a strong economy, it’s something on the order of 700,000 or 800,000 units a year. … But I think even in a recession, worldwide demand is still something in the order of 500,000 for Model 3.”

Tesla’s recent quarterly delivery volumes bode well for the Model 3’s potential. The company averaged about 60,000 quarterly Model 3 deliveries in its last two quarters. This was notably before introducing the lower-cost $35,000 version of the Model 3 and before expanding to Europe and Asia.

But Tesla still hasn’t proved it can generate annual demand for Model 3 at volumes above 500,000 per year.

Investors, therefore, should look for Tesla to explain how the introduction of the $35,000 Model 3 and the company’s expansion to new markets has impacted demand for the important vehicle. If Tesla says that the launch of the lower-cost Model 3 and its global expansion are driving a significant increase in order volumes, then Musk’s optimistic outlook for Model 3’s demand potential will be more believable.

Overall, the bias in prices is: Downwards.

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

The projected upper bound is: 307.19.

The projected lower bound is: 249.88.

The projected closing price is: 278.54.

Candlesticks

A white body occurred (because prices closed higher than they opened).
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 27 white candles and 23 black candles for a net of 4 white candles.

A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).

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 94.8460. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 6 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 47.98. 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 138 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 32. This is not a topping or bottoming area. The last signal was a buy 3 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 1 period(s) ago.

Rex Takasugi – TD Profile

TESLA INC closed up 1.240 at 279.860. Volume was 26% below average (neutral) and Bollinger Bands were 43% narrower than normal.

Open High Low Close Volume___
278.700 280.160 274.500 279.860 5,991,338

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

Moving Averages: 10-period 50-period 200-period
Close: 271.06 294.28 314.59
Volatility: 39 59 74
Volume: 8,279,312 8,898,060 9,249,937

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 11.0% below its 200-period moving average and is in an downward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. 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 27 periods. Our momentum oscillator has set a new 14-period high while the security price has not. This is a bullish divergence.

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