Tesla Inc. (TSLA) reported first quarter revenue that rose 134.8% to $2.7 billion – beating analyst estimates by $90 million, but on the bottom line, the company posted a wider than expected $1.33 per share loss – missing analyst estimates by $0.51 per share.
The company’s financial results conference call seemed to make matters worse by casting doubt on the Model 3’s production timeline. Goldman Sachs, Cowen & Co., and UBS analysts criticized the lack of clarity on the production timeline, although Baird analysts stepped in to defend the company’s earnings and reiterated their first-half delivery guidance.
Tesla recently made headlines by becoming the largest automotive manufacturer by market capitalization (prior to the recent drop), which exceeded established competitors like Ford Motor Co. (F) and General Motors Co. (GM), despite its lack of equivalent revenue. Critics of the company insist that its valuation has become stretched, while supporters argue that strong growth rates justify the valuation and Tesla has become more than just an automotive firm.
From a technical standpoint, the stock briefly reached its upper trend line and R1 resistance at $324.39 before falling to the bottom of its price channel near S1 support at $294.17. Traders should watch for a rebound from these strong support levels to the upper end of its price channel to make new highs. Alternatively, traders should watch for a breakdown below these levels to its 50-day moving average at $279.75 or S2 support at $274.26.
Technical indicators paint a mixed picture with the relative strength index (RSI) appearing neutral at 48.57 and moving average convergence-divergence experiencing a bearish crossover as the stock seems to have lost some of its momentum.
Investors will continue to watch for hints about the Model 3’s production timeline to alleviate any concerns of production delays, while traders will keep an eye on key support and resistance levels for a change in sentiment in the interim.
Charts courtesy of StockCharts.com. Author holds no positions in the stock(s) mentioned except through passively-managed index funds.