Tesla: Magnificent No More?
Instead of being a cynic or a cheerleader, let's take an objective look at Tesla.
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Tesla TSLA took an epic beating on Thursday. The stock dropped 13% by midday after what can only be described as a disappointing earnings report and conference call.
The haters, so quiet when the stock was roaring higher, were out in full force, Meanwhile, the fanboys called it a buying opportunity.
Instead of being a cynic or a cheerleader, let's take an objective look at Tesla.
On Thursday, a survey from LoopMe hit the newswires. it wasn't specifically directed at Tesla or the EV market, but dealt with the automotive industry as a whole. The headline read:
If that's true, I wouldn't want to be in the business of selling cars in 2024, Tesla or otherwise.
Regarding our Tesla trade, on Jan.16 I wrote that I had my "finger on the trigger" and would terminate the trade if Tesla failed to climb back above its bullish trendline (black dotted line). Obviously it didn't, so we're out with an acceptable loss.
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Charts via Tradingview
I realize not everyone will trade in such a controlled manner. I'm sure many Tesla shareholders are emotionally attached to the stock due to its long-term promise and vision.
Those folks may be right about the stock in the long run, but traders live by a set of rules and must cut losses short. Traders who fail to cut losses will not be traders for long. If you feel any emotional attachment to a stock, you probably shouldn't trade it.
Speaking of the long run, at what price will this stock bottom and become a buy again?
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Charts via Tradingview
Based on Tesla's weekly chart, the next layer of support is near $152. This is the location of the April 2023 lows (green line). It makes sense to buy at that level in anticipation of a bounce, but if the stock goes south of $150, cut your losses.
One thing that rattled investors about Tesla's conference call was a lack of forward guidance. It's almost as if the company was avoiding the topic.
Meanwhile, the company's promising potential -- in the form of Optimus robots and Redwood, a planned low-cost subcompact vehicle -- is still too distant to matter in the near term.
If you're familiar with Tesla lore, the company has had many ups and downs over the years. This will be a short-term rough patch for the stock, but in the long run, innovation will win in the end.
At the time of publication, Ponsi had no positions in any securities mentioned.
