Tesla, Inc. (TSLA) shares fell nearly 20% during Wednesday's session after the electric car maker confirmed delivery delays due to the coronavirus outbreak. While executives believe that production will catch up when the Shanghai factory reopens, the timetable for reopening is unclear, and investors are concerned that the outbreak could extend for months.

At the same time, Cannacord Genuity analyst Jed Dorsheimer downgraded Tesla stock from Buy to Hold following its significant rally over the past few sessions and fears of the coronavirus affecting deliveries. However, the analyst believes that the company is still a leading electric vehicle juggernaut and that the April battery day will be a critical positive milestone. Wedbush analyst Dan Ives believes that the Shanghai shutdown could have a limited impact on the 150,000 Telsa units expected to be delivered in the region over the next year given the aggressive trajectory of Giga 3 production and demand out of Shanghai.

The recent move higher for Tesla stock has been widely attributed to a short squeeze driven by strong retail buying pressure. On the other hand, institutional investors have also been transitioning from fossil fuels to alternative energy stocks, which could be driving some demand for Tesla shares in recent quarters.

Chart showing the share price performance of Tesla, Inc. (TSLA)
TrendSpider 

From a technical standpoint, the stock broke out from $650 to more than $950 this week before giving up ground during Wednesday's session. The relative strength index (RSI) fell sharply out of overbought territory with a reading of 66.41, while the moving average convergence divergence (MACD) remains in a strong bullish uptrend.

Traders should watch for consolidation above trendline support at around $685 over the coming sessions. If the stock breaks down from these levels, traders could see a move to reaction highs of $594.50 or trendline support at around $520. The secular bullish trend suggests that the stock could rebound, however, to retest highs of $969 over the coming sessions.

The author holds no position in the stock(s) mentioned except through passively managed index funds.