Tesla, Inc. (TSLA) shares moved about 6% higher in pre-market trading following its second quarter update. While the electric car maker reported a 55% quarter-over-quarter increase in second quarter production – reaching its production goal of 5,000 vehicles per week – Model 3 deliveries came in at just 18,440, which was well below analyst estimates of 20,000 to 25,000. Net reservations remain at roughly 420,000, with 28,386 vehicles delivered to date, according to the company.
Analysts are divided about whether the company will be able to sustain the 5,000-per-week production rate. In addition, President Trump's automotive tariffs could take a significant toll on the stock – along with other companies like General Motors Company (GM) and Ford Motor Company (F) – if they come to pass. The proposed 20% tariff on foreign vehicles could result in retaliatory measures in other large auto markets that could affect domestic auto manufacturers. (See also: Trump's Tariffs Would Hurt Nearly Every Segment of Auto Industry: Moody's.)
From a technical standpoint, the stock experienced a bearish engulfing and moved lower to pivot point levels of $333.51 by mid-day on Monday. The relative strength index (RSI) fell to neutral levels of 51.39, but the moving average convergence divergence (MACD) experienced a bearish crossover in late June and remains in a bearish downtrend. These indicators suggest that the stock could see more downside ahead before consolidating – particularly given the high level of short interest in the stock at this point in time.
Traders should watch for a breakdown from the pivot point toward support levels at the 200-day moving average at $322.33, trendline support at around $315.00 or the 50-day moving average at $309.57. A breach of these levels could lead to a move down to lower trendline and S1 support near $300.00 per share. A rebound from the pivot point could lead to a move to retest prior highs at around $370.00 or upper trendline and R1 resistance at around $383.17. (For more, see: Tesla Now a 'Real Car Company,' Says Musk After Key Production Goal Is Met.)
Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.