Tesla shares have experienced a veritable descent into hell on the stock market since their historic high of $1,243 in November 2021, with a price drop of more than 40%, at the time of writing. In the first half of 2022, electric car giant Elon Musk’s fortune plunged nearly $62 billion, while the world’s 500 richest people lost $1.4 trillion, “a fall vertiginous which constitutes one of the largest declines ever recorded over six months”, noted Saxo Bank last Monday.
Tesla shares suffered, like other growth stocks, from the sharp rise in long-term rates (which weighs on theoretical valuation multiples), supply problems in the automotive sector, the chaos of the Chinese economy (Covid-9 restrictions, etc.), the erosion of consumer purchasing power amid high inflation in the US and Europe, and the darkening outlook for the global economy.
Tesla stock could soon be three times cheaper
Towards a disappointing second quarter for Tesla
From the standpoint of fundamentals alone, Jefferies, which noted, following the second quarter accounts, the sequential improvement in deliveries of S/X models and the increase in sales of 3/Y, is targeting 1,050 dollars on the action. A target that nevertheless seems excessive to us, despite the good long-term growth prospects, which seem to us to be largely priced in despite the stock market berezina. JP Morgan, for its part, maintained its sell advice. Financial analysts expect a plunge in free cash flow generation (after investments) in the second quarter compared to the first. Credit Suisse slashed its earnings per share forecast for the past quarter by half.
According to Elon Musk, Tesla’s new factories in Germany and the United States, “real furnaces for money”, would lose “billions of dollars” due to battery shortages and supply disruptions in China. “There are a ton of expenses and hardly any production,” the billionaire explained recently.
New delivery record for Tesla, which jumps on the stock market
The Tesla share remains clearly acclaimed by the shareholders
Despite these numerous headwinds, degraded prospects and the vertiginous fall in the stock market price, Tesla shares are still widely acclaimed by equity investors. It is even the action “the most held, for the fourth consecutive quarter”, has just reported eToro, in the light of its customer base. With the exception of Italy and Spain, Tesla is in pole position in all countries, reports Antoine Fraysse-Soulier, head of market analysis at the broker.
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What does technical analysis say?
From the point of view of technical analysis (graphical and mathematical analysis of price movements), Tesla shares broke down a key rising mathematical support at the end of June in monthly data (which then stood at 690 dollars, but which is now at $707). A new major negative signal, after the sinking last May of the important support of 824 dollars.
Tesla at a crossroads on the stock market? : tip of the day
On June 2, the stock’s rebound failed at $793, the touchpoint of the former mid-term bullish channel and the 38.2% Fibonacci retracement of the entire rally initiated in March 2020. For Hourly, the stock is trying to stabilize above the $620-661 support zone, but there is no buy signal yet. And a possible clear break and closing of this major support would favor a bearish acceleration towards the supports of 560 dollars, or even 520-540 dollars. Below that, the next major support is currently moving to $488-490.
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Author’s declaration of interests