Tesla, Inc. (TSLA) shares rose more than 4% during Tuesday's session as analysts debate the impact of lower oil prices and COVID-19 on future revenue and profitability.
Wedbush's Daniel Ives noted that some customers may stay away from electric vehicles (EVs) given cheaper gas prices, but the larger environmental movement and next-generation technology offset many of these concerns. New Street Research's Pierre Ferragu echoed these sentiments, saying that the oil-versus-electricity cost arbitrage is nonmaterial in EV purchase decisions.
Daniel Ives also said that Shanghai production appears to be returning to normal, but hitting 100,000 units in the first year appears unlikely given the hit from the COVID-19 outbreak to consumer demand trends and buying behavior. Despite these challenges, he believes that Tesla's 500,000 unit demand levels for FY2020 remain an achievable goal.
From a technical standpoint, the stock moved off of trendline support to retest its 50-day moving average at $648.43. The relative strength index (RSI) remains at neutral levels of 40.92, but the moving average convergence divergence (MACD) remains in a strong bearish downtrend. These indicators suggest that the stock could see some more downside ahead.
Traders should watch for an ongoing rebound from trendline support and a potential breakout from upper trendline resistance. If the stock breaks out, traders could see a move toward reaction highs of $806.28. If the stock breaks down, traders could see a move toward support levels of $540.64. These moves will also be affected by the wider market, which has experienced tremendous volatility over the past several sessions.
The author holds no position in the stock(s) mentioned except through passively managed index funds.