Tesla Stock Dives Despite Strong Deliveries as Key Concerns Remain

Tesla stock price suffered its worst day this year, even after the company published strong vehicle delivery numbers. This happened as many Americans moved to electric vehicles (EVs) as gasoline prices jumped. TSLA dropped to $393, down by 13.2% from its highest point this year.

Tesla Stock Fell Despite Strong Delivery Numbers

There are signs that the Iran war and the soaring gasoline prices pushed more people to embrace EVs earlier this year. At its peak, gasoline jumped to over $4.5, while diesel crossed the important resistance level of $6.

In a statement on Thursday, Tesla said that it made 51,758 vehicles in the second quarter and delivered 480,126. These deliveries were higher than what analysts were expecting.

Other US EV companies also published strong delivery numbers. Rivian, which is popular in the EV truck industry, made 12,613 vehicles and delivered 12,194 of them. It also boosted its delivery outlook to between 65,000 and 70,000, up from the previous estimate of between 62,000 and 67,000.

Therefore, Tesla stock fell sharply after the announcement because it had been up significantly before it happened. It had jumped from $368 to $430 in the days before the numbers came out.

Analysts maintained a neutral position for the company. William Blair reiterated the market perform rating, while Morgan Stanley reiterated the equal weight rating. Truist’s William Stein hiked the target to $430.

TSLA Stock is Facing Major Concerns

Tesla shares retreated as investors braced for several concerns. First, there are concerns about whether the strong deliveries will continue in the next few months now that gasoline prices are falling.

Brent and the West Texas Intermediate (WTI) dropped to $72 and $67, respectively. As such, there is a risk that customers will opt for Internal Combustion Engine (ICE) vehicles.

Tesla is also facing concerns about rising competition in key markets. For example, the Chinese market has become highly saturated, with companies like BYD, Nio, and XPeng gaining market share.

Like in the United States, the Chinese government also decided to remove its incentives. This explains why their stocks have plunged in the past few months.

Looking ahead, the next important catalyst for the stock is the upcoming earnings, which will come out later this month. Analysts expect the report to show that its revenue rose by 9.56% to $24.65 billion. For the current quarter, analysts expect that the revenue will fall by 4.26% to $26.9 billion.

A key risk to watch in that report is its capital expenditure. It’s soaring this year after the company launched the Terafab project in Texas.

This project is expected to cost over $100 billion. Also, in its last earnings report, the management noted that the company will have a negative free cash flow this year.

Tesla Share Price Technical Analysis

The daily chart shows that the TSLA stock price slumped to $390 on Thursday, its lowest level in a week. This retreat happened after it formed an evening star candlestick pattern a day earlier. This pattern is made up of a small body and two smaller shadows.

It also retreated after it retested the descending trendline that links the highest swings since May 13. The stock has now slumped below the 50-day moving average. Also, the Strong, Pivot, and Reverse levels of the Murrey Math Lines tool are at $406.

Therefore, at this stage, the stock has two potential outcomes. It can continue falling as traders target the key support level of $368, its lowest level in June.

Alternatively, the stock could rebound and continue its uptrend, with the next level to watch being $468. That represents the uptrend, with the next level to watch being at $468, the extreme overshoot. These gains will depend on how its earnings come out later this month.