Tesla, Inc. (TSLA) shares fell 10% during Wednesday's session following the electric vehicle maker's widely anticipated Battery Day event and a network outage.
Tesla's Battery Day contained a lot of long-term ambitions, but most analysts felt that these objectives were already baked into the stock price. The company outlined plans to cut costs by 56% per kilowatt-hour (kWh) and unlock a 54% range increase through vertical integration with the ultimate goal of making 20 million vehicles per year at a $25,000 price point with full autonomy.
Deutsche Bank upgraded Tesla stock to Buy with a $500 price target following the event, but several other analysts were more cautious. Wedbush's Dan Ives called the long-term production a steep ramp, while Bank of America's John Murphy said that external funding may be necessary in order to meet the lofty new objectives.
Dilution (also known as stock or equity dilution) occurs when a company issues new stock, which results in a decrease of an existing stockholder's ownership percentage of that company.
In addition to Battery Day reactions, Tesla's stock price dipped after reports of a complete network outage resulting in the inability to process deliveries and orders. Many owners also said that they could not connect to their cars through the mobile app. By mid-day, the outage appears to have subsided, although the full extent remains uncertain.
From a technical standpoint, the stock extended its decline toward trendline support and the 50-day moving average near $302.49. The relative strength index (RSI) moved into neutral territory with a reading of 46.99, but the moving average convergence divergence (MACD) remains in a bearish downtrend. These indicators suggest that the stock has more room to fall, although it stands at robust trendline support levels.
Traders should watch for a breakdown from trendline support toward Fibonacci support levels at $344.70 or reaction lows of about $330.00. If the stock rebounds, traders could see a move to test trendline resistance at around $445.00 or reaction highs of $450 or $500 per share.
The Bottom Line
Tesla stock moved sharply lower during Wednesday's session following the company's Battery Day event and a network outage. While the stock reached trendline and moving average support levels, the overall trend remains bearish, and there could be more room for downside.
The author holds no position in the stock(s) mentioned except through passively managed index funds.