Tesla stock reversed course this morning as investors finally started to face reality just hours before the company’s fourth quarter earnings release. Volume has been extremely heavy today, with more than 3.6 million shares having changed hands before noon Eastern. The average daily volume is 4.74 million shares.
Where’s the stimulus for Tesla stock?
Tesla stock has skyrocketed by more than 50% in only three months, hovering around their high of more than $287 per share. According to Forbes contributor Chuck Jones, this tear pushed the shares into overbought territory, and he warns that the company’s chart formed a double bottom when combining the recent highs with the Nov. 14 low of $181.45.
He adds that Tesla stock has actually been overbought since the beginning of this year, as the Relative Strength Index has been over 70. He adds that the last time Tesla shares were so much higher than their moving averages was in 2014 and predicts that they will move down rather than up on today’s earnings release.
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In his commentary this morning, Investing.com Senior Analyst Clement Thibault noted that momentum has been driving Tesla stock, as it has roared to its recent levels with little to no “stimulus.” While he does feel the company may be disruptive, he doesn’t think it brings much to the table from an automotive perspective, either technologically or design, that other automakers can’t or won’t bring to the market soon.
Tesla stock is priced for perfection
We’re starting to hear a phrase we’ve heard in the past regarding Tesla stock pop up again, and that is “priced for perfection.” If the company failed to perform above expectations in the fourth quarter, the punishment will likely be immense, and as the ominous warnings from analysts continue today, the punishment may only just be beginning.
Earnings estimates vary widely because of confusion as to how SolarCity‘s results will be included. Wall Street is looking for losses of anywhere between 13 cents and 43 cents per share on $2.18 billion in sales. For the March quarter, consensus stands at losses of 50 cents per share and $2.21 billion in revenue.
Thibault feels that Tesla stock “belongs in the too expensive section of the equities market,” as he believes the company has benefitted greatly from having Elon Musk as its CEO. He called Musk a “marquee name,” and he appreciates his value, although he wants to see tangible numbers rather than just long-term promises.
Tesla stock moving sideways despite tear
The Investing.com analyst doesn’t expect much to change for Tesla due to today’s print or until we hear more about the true timeline for Model 3 production, which won’t be revealed until later this year.
“Tesla has hit $280 several times before, for the first time in September 2014. Since then the company has been trading in a sideways range—and for good reason,” Thibault told ValueWalk in an email. “Laudatory language and illusory promises can only take a stock so high.”
He also said in a post this morning that he feels only three non-concrete things are responsible for the recent run-up in Tesla stock: Elon Musk, the Tesla brand / car, and “the energy revolution.”
Shares of Tesla fell by more than 1% during regular trading hours on Wednesday, falling to as low as $272.60.