Tesla has been a remarkable stock for a really long time. Not so much in 2022. Investors could use some good news, and some could be on the way. There’s a big headwind to worry about, though.
Tesla (ticker: TSLA) stock closed down about 2% Thursday, at $183.17 a share. The S&PS&P 500 and Nasdaq Composite fell 0.3% and 0.4%, respectively. Tesla shares are down about 6% over the past few days, after rallying more than 10% from a 52-week closing low of $177.59 on Nov. 9.
The dip after the recent rally isn’t a surprise to traders. “Sell any rally to $200,” says 22V Research strategist John Roque. He doesn’t cover Tesla stock and doesn’t have a view on fundamentals such as China sales or electric-vehicle competition. He’s essentially a trader looking at the stock chart.
Tesla stock chart has shown a troubling pattern for the week. The trend hasn’t been a bull’s friend since Tesla failed to set a new high early in 2022, and then couldn’t push through $300 back in the summer.
Tesla stock’s 52-week high was set back in January at almost $400. Shares got back to almost $380 in April.
Roque isn’t alone in his concern. Fairlead Strategies founder Katie Stockton told Barron’s that while megacaps, including Tesla, had fallen too far too fast in recent weeks, Tesla “needs to climb back above $207 by [Nov. 18] to avoid a confirmed breakdown that would put next support near $180.”
Tesla stock doesn’t look like it’s going to get back to $207 by Friday’s close. That means Tesla stock is more likely to go lower than higher.
Long-term investors don’t typically trade stocks on a weekly basis for profit. Still, they can look at the chart for help setting expectations.
Stock charts matter, of course, until they don’t. Fundamentals win out in the long run. There are some positive things on the horizon bulls are looking forward to.
For starters, there are the new $7,500 purchase tax credits that go into effect in the U.S. in January thanks to the recently passed Inflation Reduction Act. That should help Tesla sell more EVs.
Tesla bulls also expect the company to announce a location for the company’s next plant in the next few months. That’s speculation, but Tesla has the capacity to make roughly 2 million EVs today at its four plants in California, Texas, Germany, and China. Those plants can be expanded, but investors expect about 3 million deliveries in 2024. Growth like that should require a new facility.
A new facility could be a positive catalyst. So would a share buyback. Bulls have been thinking about stock repurchases since Tesla CEO Elon Musk suggested one was possible on the company’s third-quarter-earnings conference call.
Bulls hope for better days. Bears are happy to see shares fall, and continue to warn that Tesla can’t escape rising interest rates and a weakening global economy. The bull-bear debate will continue, but both groups should remember traders don’t care either way.
That’s why charts can be useful for any investor to watch.
Tesla stock is now down about 48% so far this year: It’s the worst year-to-date performance to mid-November in the stock’s history. Tesla became a publicly traded company back in mid-2010.
Barring an incredible rally, shares will be down for the full year. That will only be the second time Tesla stock will have dropped on a yearly basis in its life as a publicly traded company.