Tesla Shares Can Surge 20% Despite Elon Musk Fatigue
You might be exhausted by Elon Musk but long-term Tesla holders have reason to hang in there.
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Exhausted by Elon
The market is utterly exhausted by Elon Musk. Shares in Tesla TSLA are down 46% from their post-election high.
And I get it. Tesla sales are lower, in part because of a CEO who alienates his core clientele. The thing is, that’s not the entire story.
Tesla’s design is equally polarizing. And I’m not just talking about the Cybertruck. Really, I’m talking about how Teslas are becoming niche products, designed to appeal to people who love tech and can’t wait for robots to take over the task of driving. The UX has just gotten too weird for many people.
Example? Modern Teslas have done away with the turn signal stalk. You’re supposed to use buttons on the steering wheel. Personally, I don’t have the muscle memory to remember whether the upper button is left or right. So, when I drive a family member’s Model S, I simply don’t signal. Sorry. Blame the robot.
At the same time, there are lots of great EV competitors out there. Porsche’s POAHY Taycan is better than the Model S. Rivian’s RIVN R1T and R1S are better than the Cybertruck and Model X. And there are a host of mainstream models that are better than Model 3s for 90% of your driving activities. Except for road-tripping.
Also, I don’t buy the self-driving thing. Musk has promised that it was around the corner for years with nothing to show. We're tired of waiting, Elon! I’d rather drive myself, anyway.
So, I’m biased against Tesla, even though I’ve owned a really nice Model 3 Performance for the last five years.
The thing is, technically, the stock is at an interesting place and may be worth putting on your shopping list for a trade.
A Confluence of Bullish Trend and Support, With a Spike in Volume
Since year's end, TSLA shares have been trending lower. Painfully lower, for those who bought after the election.
But, zoom out and look at the last 12 months and you can see that, although the bubble burst, shares are rising. In fact, they’re nearly 50% since last March. And there’s support here, from both the uptrend line and from the peaks from last July, September and October.
Long-term holders aren’t too unhappy. Only the short-term ones.
As for the short-term holders, how many have bailed out already? Volume, in the red box above, has spiked and, while it’s not as climactic as I’ve seen at other bottoms, it does suggest that the traders have already dumped their shares.
Oversold With a (Small) Bullish Divergence
The RSI is oversold for the first time in almost a year. Plus, there’s a small bullish divergence, with price continuing to fall while the indicator is off its lows.
The caution is that TSLA sometimes falls further before bouncing. And, of course, oversold never means buy. Stocks can remain oversold longer than you or I (or even Musk) can remain solvent.
The Bottom Line
Trend and momentum support a bounce.
However, with a PE that belongs on Mars combined with slowing growth, I’m not sure that I agree with the longer-term bullishness of some analysts.
I'm also cautious on the entire market. I was once told that volatility near the highs tends not to be a good sign. (Need to test that hypothesis!) And the market appears to be rolling over, setting new lows for the current move as I write this.
That said, a trading bounce to $300 or even $325 seems reasonable. More than a dip below about $250, and I’d sell as fast as a Model S Plaid.
Risk is about 4% for profits of 20%.
