Stocks

Tesla Motors Inc (TSLA) Shares Beginning Downtrend?

Shares of Tesla Motors Inc (NASDAQ:TSLA) has recovered some of the losses sustained in early trading, where the electric car company saw its shares fall around -2.50%.  Shares have since recovered some of the losses, but are still down -1%.  However, the significant part of Tesla’s tumble this morning is the fact that it trades at a five week low and is below the 200 day moving average, a long term trend signal for technical analysts.  The last two previous trading sessions also saw Tesla’s share price fall below the 200 day moving average.  Currently, the 200 MA sits at $232.18, just a stone’s throw away from current price of $229.28.  I expect the price action to test the 200 MA at that level again in the coming days and based on the response, we will see if this is the beginning of a new downtrend or a false breakout lower.  However, shares of Tesla do have a horizontal support at $220, which should be viewed as the next target, should the 200 day moving average hold and turn from support to resistance.

Tesla Motors
Finviz.com

Tesla Motors’ market cap

Looking at the fundamentals, Tesla Motors Inc (NASDAQ:TSLA) has a market cap of $29.02 billion and is rated a “buy” by analysts.  Price to forward earnings is at 80, price to sales is overvalued at 10.16, price to book is overvalued at 30.17, and price to cash is at 12.24.  Total debt to equity is 2.58 and cash per share tallies up to 18.91, giving the company a solid current ratio at 1.80. Earnings are forecast to climb 83% this year and 380% next year.  Sales, quarter over quarter, are up 167.50%, while earnings per share fell -87.50% during the same period.  Short sellers remain bearish, with a short float of 23%, but performance has been good: up 86% in past year and up 54% year to date.

Tesla Motors’ valuation ratios

Overall, when looking at Tesla Motors Inc (NASDAQ:TSLA)’s valuation ratios, it is apparent that the stock is certainly no undervalued diamond in the rough.  However, the growth stock does have some good earnings over the past several years and certainly earnings growth forecasted is bullish.  However, it is unclear yet whether Tesla could be entering a period of weakness.  Typically, the 200 day moving average is a strong support for an uptrend and when broken, is usually not a good sign.  Granted, we are still waiting for a retest of the $232.18 level and will have to wait and see the price action for the rest of this week to determine whether Tesla could be heading to its next support level of $220.  However, from a long term perspective, Tesla still has a very bright future and is already making a name for itself in the electric car niche industry.  Additionally, the company has ample cash reserves to deploy for growth and acquisitions, which will definitely help keep the car company competitive.

Disclosure: No positions

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  • zAp

    The notion that low gas prices will hurt Tesla is wrong. If an individual can afford a $70K+ vehicle..they can afford $4 gas. People are buying Tesla because it is the best vehicle on the road and the company provides excellent customer service (#1 ranking in consumer reports, NHTSA etc). Additionally, the low gas prices wont last forever (6-12 months.. maybe) and then its back the the $3.50-4 norm. I do believe the drop in gas prices will hurt the EV market though…but on the cheaer end. The LEAF, Focus, E-golf, and i3 will all likely take a hit as they are marketed as a alternative to the pump. When the pump is cheap..they are not very appealing. So near term..Im guessing EV sales dip a little bit for the above brands ($35K and below), while Tesla is not impacted.

  • Slock

    Used to wok with em and I dismiss earning misses due to tech delays as possibly a sign that competition is finally catching up with em. Gas prices head in lower makes me nervous with a “hold” rating. Gaga factory may eat up cash unless they initiate buyback to bolster investor sentiments. For now I am out.

  • Brokinarrow

    I’m a huge fan of Tesla…. but secretly I hope their stock DOES drop temporarily so I can afford to buy some before it explodes again! :D