Tesla, Inc.

Tesla, Inc. (NASDAQ: TSLA) is a vertically integrated sustainable energy company that makes electric automobiles to transition the globe to electric transportation. The company supplies solar panels and solar roofs for energy generation and batteries for stationary storage. Tesla boasts a diverse array of vehicles, including premium and medium sedans and crossover SUVs. In addition, the business intends to produce cheaper cars, compact SUVs, light trucks, semi-truck, and sports cars. In 2021, a little more than 936,000 units were delivered worldwide.

Key Financial Highlights:

• Macroeconomic Headwinds: Current macro environment is quite adverse for high-growth companies like Tesla. Factors such as higher raw-material costs, supply-chain bottlenecks, and production disruptions in China are pointing to a prolonged downturn the EV manufacturer. Also aid heightened inflationary pressure in the raw materials, Tesla raised the prices of its vehicles multiple times this year. Moreover, its CEO, Elon Musk, recently warned that supply headwinds and production challenges in China would impact its Q2 performance as well.
• Hovering in a Long-term Bearish Territory: Shares of the industry leader Tesla (NASDAQ: TSLA) fell more than 38% this year. Moreover, it has dropped about 48% from its 52-week high. On Daily price, TSLA shares are hovering in a long-term bearish trend with its shares traded well below the crucial long-term as well as short-term support levels of 200-day and 50-day EMAs.
• Twitter Deal has increased the volatility in the stock: The losses in (NASDAQ: TSLA) shares accelerated since CEO Elon Musk offered to buy Twitter (NYSE: TWTR) in a USD 43-billion deal in April. TSLA shareholders, however, didn’t like this idea. They feared Musk would be spread too thin if he tried to overhaul Twitter while also running Tesla and overseeing his Space Exploration Technologies Corp. Musk also planned to use some of his Tesla stock as collateral for loans to pay for the Twitter deal, though his latest financing doesn’t include share pledges.

Stock Recommendation

Production headwinds and cost pressure together with chip shortages, supply volatility, and COVID-led lockdowns in China took a toll Tesla Inc. Given the challenges, shares of top EV maker dropped significantly. Further, the partial lockdown in the Shanghai factory is a near-term headwind. We believe TSLA’s Q2 revenues could decline sequentially amid ongoing production challenges. However, TSLA has managed the supply and production headwinds reasonably well. Its higher average selling prices have cushioned its margins. However, cost and supply headwinds remain a drag in the short term. Hence, we recommend a “Watch” rating on the TSLA shares at the current market price of USD 725.0 on June 21, 2022, at 09:54 AM PDT.

TSLA’s 1-Year Technical Price Chart (as of June 21, 2022, at 09:54 AM PDT). Source: REFINITIV, Analysis by Kalkine Group 

Technical Summary

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV. 

Note 2: Investment decision should be made depending on the investors' appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above.

Note 3: The report publishing date is as per the Pacific Time Zone.