Tesla’s recent breakout of resistance has faltered after the latest earnings release.
TSLA – Daily Chart
The price of TSLA shares has slipped below the recent breakout level. Weakness in tech stocks could be a false breakout.
Tesla posted its lowest quarterly profit margin in five years this week, leading to an earnings per share miss for the fourth consecutive quarter. The stock saw its most significant one-day percentage drop in Tesla stock since 2020. The company’s market capitalization slipped to just under $700 billion, down from over $1 trillion in 2021.
Another drawback is that Tesla’s valuation relies on investor expectations of future profits driven by new products such as its promised robotaxis and robots.
“All of Musk’s enthusiasm on the call, outside of (energy) storage, were for products that don’t exist,” said TD Cowen’s Jeff Osborne.
Investors are losing some patience after Musk delayed the launch of its Robotaxi earlier this month. Tesla’s EV deliveries have fallen for two straight quarters, while it has not introduced an anticipated lower-cost model that many hoped for, causing buyers to turn to rival EV makers. China’s BYD widened its sales lead over Tesla in the first half of 2024.
Tesla has been cutting prices and boosting incentives to increase its ageing vehicle lineup sales. Musk said the company’s rivals “have discounted their EVs very substantially, which has made it a bit more difficult for Tesla.”
Management said the cheaper models it plans to introduce in the first half of 2025 would reduce costs less than hoped, so it delayed its anticipated robotaxi event to October.
“Tesla is not being priced on auto, but autonomy and AI … We believe any payoff from AI initiatives is further out,” wrote UBS analyst Joseph Spak. The analyst has a sell rating on the stock.
