Shares of Tesla, Inc. (TSLA) have fallen more than 6% since the beginning of the week after the company revealed its second quarter vehicle production and deliveries. In the update, the company disclosed producing 25,708 vehicles and delivering just over 22,000, which failed to impress the market. Management expects these figures to pick up in the second half of the year, but the lackluster performance has created a lot of uncertainty.
The analyst response to the news has varied quite a bit. Goldman Sachs lowered its price target on Tesla stock to $180.00 per share with a Sell rating, citing potential downside as the Model 3 launch curve undershoots the company's production targets. But Consumer Edge maintained its Overweight rating and $385.00 per share price target, saying it remains confident that Tesla will top expectations and that the narrative will turn to the Model 3. (See also: Tesla Stock Is Gearing Up for the Model 3 Launch.)
From a technical standpoint, Tesla shares have moved into decidedly bearish territory. The stock broke down from trendline support to its nearby its 50-day moving average at $338.96 and S1 support at $334.88. At the same time, the moving average convergence divergence (MACD) experienced a sharp bearish crossover, and the relative strength index (RSI) has lost a lot of its momentum with a move to 39.82 – nearing oversold territory.
Traders should watch for a breakdown from these levels that could send shares to S2 support at $308.16 or the 200-day moving average at $258.51. While a bearish bias may be advisable in the short term, traders could see a rebound from these levels toward the pivot point at around $360.94, especially if positive news flow emerges. The long-term trend remains largely bullish, as investors remain confident in CEO Elon Musk's abilities to overcome long odds. (For more, see: Why Tesla's Stock May Defy the Skeptics.)
Charts courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except in passively managed index funds.