Tesla, Inc. (TSLA) shares fell more than 4% on Thursday after CNBC reported that battery production issues at the Nevada Gigafactory are worse than previously thought. According to employee sources, the company is reportedly making some batteries by hand and borrowing workers from suppliers to assist with the manual assembly. These developments have added to concerns over delays for the Model 3 – a car that could make or break the company.
After the market closed on Thursday, Tesla attempted to put the concerns to rest, saying that it is on track with the previous projections for achieving increased Model 3 production rates that it had forecast earlier this month. The company announced earlier this year that it would produce Model 3 units at a pace of 5,000 per week by the end of the second quarter. The current production rates, as of early January, are at over 1,000 vehicles per week. (See also: Tesla Denies Further Model 3 Production Issues.)
From a technical standpoint, the stock posted a third day of losses on Thursday and moved to R1 and 200-day moving average support at around $335.33. The relative strength index (RSI) fell to neutral levels at 52.34, but the moving average convergence divergence (MACD) could see a near-term bearish crossover if the stock moves lower. This crossover could be a signal of further downside and lead to a retest of trendline support.
Traders should watch for a rebound from mid-channel support levels to retest trendline and R2 resistance at around $367.04. If the stock breaks down from these levels, traders could see a move to lower trendline, pivot point and 50-day moving average support levels at around $320.00. A crossover of the 50- and 200-day moving averages last month has put the stock on a long-term neutral to bearish trend that traders will be closely watching. (For more, see: What Makes Tesla's Business Model Different?)
Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.