Tesla Inc Stock Now Volatile Amid Positive News Flow, Analyst Warnings

Tesla SEC Complaint Elon MuskBlomst / Pixabay

Tesla Inc (NASDAQ:TSLA) stock continues to buck the trend that usually follows what chart technicians refer to as a “death cross.” In fact, the stock has climbed by more than 10% in one week as it rebounded from its post-earnings slump. However, now yet another analyst is sounding the alarm and warning that things could get ugly for Tesla stock again soon.

Here’s what could be driving Tesla stock

Investors who are bullish on Tesla stock have been riding a recent wave of positive headlines covering everything from the Model 3 to the recently-revealed electric semi. One of the main drivers of the stock all year long has been the Model 3, and there have been signs that production could finally be improving.

Reports that deliveries are starting to move beyond Tesla insiders to include SpaceX employees and others are being interpreted as a positive for production, for obvious reasons. The EV maker disappointed investors when it shifted its goal for producing 5,000 Model 3 cars a week from the end of this year to late in the first quarter of next year. It also wouldn’t say when investors can expect the next major milestone: 10,000 per week.

However, observers have reported that Tesla seems to be stockpiling large numbers of Model 3 cars at its new delivery center in Los Angeles, so it does at least appear that production is picking up. A Redditor also reported that higher vehicle identification numbers for the Model 3 are just starting to be reported, with numbers now topping 2,000. Although the numbers aren’t issued sequentially, it is a clue that a larger number of Model 3 cars are being churned out.

Something else that’s driving Tesla stock is the stream of reports from companies that are reserving electric semis from the company. It seems that the vehicle is already being well-received.

Another warning about Tesla stock

Despite all these positive headlines, Miller Tabak analyst Matt Maley warned that trouble could be ahead for Tesla stock. Cascend Securities analysts said that production problems with the Model 3 continue, despite all the signs that they could be improving. Maley also said on CNBC that Tesla may have to issue additional debt next year, which has been an ongoing problem.

He warned that Tesla stock could become extremely vulnerable if investors start to see meaningful weakness next year. He explained that if the market senses that a correction is near, investors could start taking profits from this year’s rocket ride to lock in their gains in Tesla stock over the last year.

He pegs the important level to watch at $290 if weakness starts to appear in Tesla stock later this month or early next year. According to Maley, the stock has bounced at around this level a number of times this year, and it was the high in 2014. After Tesla stock broke past $290 early this year, it started to rally. Thus, he sees a break below $290 as a negative signal for the shares.

Maley isn’t the only analyst flagging Tesla stock right now; JPMorgan actually advised investors to short it a couple of weeks ago.

Tesla stock remained volatile on Wednesday, starting the day in the red before flipping into the green and then reversing yet again. As of this writing, the high for the day is at $344.22, while the low is at $336.50.

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About the Author

Michelle Jones
Michelle Jones was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Michelle has been with ValueWalk since 2012 and is now our editor-in-chief. Email her at Mjones@valuewalk.com.

1 Comment on "Tesla Inc Stock Now Volatile Amid Positive News Flow, Analyst Warnings"

  1. Tesla reminds me of Playboy stock in the seventies. People bought it because it was “cool”. They didn’t care about the financials. They wanted to be a part of a social movement – freedom.
    Tesla represents more than just cars. It represents belief in a green future – that we can overcome climate change – that humanity has a future. That’s why Elon Musk is a hero to many. He’s not a carmaker, an entrepreneur, a rocket maker. He’s a tech messiah self-appointed to save humans from destroying the planet – and themselves. And real or not – it’s not a bad thing to believe.
    That’s how I see it.

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