Barron’s posted an interesting quick little article yesterday on their “Stock to Watch” page that detailed of a predicted downturn continuation for Tesla Motors Inc (NASDAQ:TSLA). While Tesla is still up nearly 40% year to date, the past three months have been tough for the electric automotive company, which saw shares slide -24.41%. The “Stock to Watch” article was based on commentary from Bespoke Investment Group, in which they detail their reasoning behind their prediction that Tesla could fall from its current price of $210.40 to $200, and why investors should wait to buy at the $200 level. “The stock has had a meteoric run over the past few years, and while a company can be a great long-term investment, it’s also going to have downswings like the one it is currently experiencing. We don’t know where the downtrend stops, but it appears the $200 level has a magnet attached to it at this point. If you’re going to get long, you could set a $200 buy limit for a small initial position, and then look to buy more in the coming months” (Barron’s). Shares of Tesla are currently down -1.80% on the day.
Tesla Motors profitability to fall to $165
Then, this morning, another article popped up on Barron’s “Stocks to Watch” that had a story about Tesla and the probability it will fall to $165, extending losses past Bespoke’s forecast. Orips Research came out today and explained why they believe Tesla Motors Inc (NASDAQ:TSLA) could be heading for a more meaningful correction to $165: “An October 28th report on Tesla Motors, Inc. discussed an extremely cautious intermediate outlook. In September, the end of an intermediate uptrend was signaled via a break below the bullish support line that began in November 2013. The break signaled a shift in the intermediate trend from positive to neutral. Moreover, the report depicted the development of the right side of a bearish head and shoulders topping pattern that began in June.”
“A negative signal developed yesterday as a high volume break occurred below the slightly upward slanted neckline of the topping pattern, in the $219.20 area. The break below the neckline signaled a trigger of the bearish pattern and indicated a downtrend with a minimum expected price objective in the $165 area. In addition, yesterday’s bearish trigger may result in downward momentum in the near term. Indicators are generally negative, adding to the overall bearish tone” (Barron’s).
Tesla Motors’ swings could be volatile
Tesla Motors Inc (NASDAQ:TSLA) certainly is in a rut right now and it certainly shows that their revised, more cautious outlook really spooked investors who are now heading for the exits. Overall, Tesla is going to be around for the long term, as the analysts above suggest, but the swings could be volatile and Orips Research is forecasting a -27% drop in shares of Tesla from current levels. Certainly, long term investors would find this scenario as a good time to add to their investment for the long haul. However, Tesla must maintain and calm investors’ fears once again before it can begin another leg higher.