Tesla Inc (NASDAQ: TSLA) appears to have tremendous short potential still. It might pay to wait for the Company's stock to fall below $560 per share, though. On at least two occasions in 2021, buyers have been waiting at this price point to scoop up shares, significantly countering any downwards momentum. Thus, waiting for a decent break below $560 might be prudent before betting against the EV manufacturer. For the more cautious, waiting until $500 is another entry point worth considering.
YTD, Tesla shares have fallen 11.7%. For the stock to reach $560 or $500, the stock would have to fall another 13.1% and 22.4%, respectively.
The share price has been traversing down a flattening wedge since the beginning of the year. Of course, This technical perspective is no perfect predictor of where the price is heading. Still, from a fundamental perspective, recent Tesla's PR isn't exactly helpful to for Tesla Bulls.
The issues that have recently affected Tesla include:
- The Company's CEO, Elon Musk, said last week that he doesn't enjoy his role at the Company. Further, he believes the Company would fail if he were to step back from leading the Company, intimating that the Company's success hinges too much on his involvement
- The above piece of hot gossip was revealed during Musk's court testimony in which he is defending Tesla's allegedly poor decision to purchase the cash-strapped SolarCity in 2016. The lawsuit's plaintiff is asking Tesla repay shareholders the $2.6B cost spent on acquiring the SolarCity.
- Tesla has had to "recall" almost 300K vehicles in China due to safety concerns regarding its Autopilot feature. Admittedly, the recall is considered a soft recall and only involved a software update. Nevertheless, Tesla's Autopilot credentials have taken another hit. Early in July, Musk admitted that the Company has struggled to overcome the many challenges included in implementing a safe self-driving vehicle. Personally, the idea of self-driving cars always seemed a little far-fetched to me, so I never understood how the Company's was able to leverage the hype of this technology.
In May, Michael Burry, via his investment company, Scion Asset Management, revealed a half-a-billion short position against Tesla.
One reason that Burry is so Bearish on Tesla is that he sees a significant portion as unsustainable. Currently, Tesla pads its balance sheet by selling carbon credits to other automakers. In April, Tesla reported $518 million from the sale of carbon, equivalent to 20% of the Company's revenue for the period. Naturally, Burry sees this form of revenue drying up soon, as Tesla's competitors push into EV production themselves and require fewer credits from the EV leader.
Curiously, Tesla shares have risen 11.6% since Burry’s revelation.
While the world continues to grapple with the Coronavirus, the financial markets are captivated by the financial phenomena that are GameStop. Currently, the stock price sits at $255, but by the time this is posted, the price will likely be plus or minus $50. Lawsuits have been served to Robinhood in New York and Chicago due to the low-cost brokerage withholding the ability to purchase more stocks of GME. Sources have stated that Robinhood is currently drawing millions from credit lines from Goldman Sachs and JP Morgan Chase.
It is incredible how captivated the financial community and even main street on what is currently happening with GameStop. Yesterday, we had the titans on the equity markets releasing earnings. Apple, and Tesla. We also had the FOMC releasing their interest rate decision, alongside Federal Reserve Chairman Jerome Powell releasing his views on the economy, but everyone was too focused on GameStop.
The Federal Reserve keeps rates unchanged as Jerome Powell believes that "its going to be a struggle "the pandemic still provides considerable downside risks." The Federal Reserve continues to show its unwavering support for the US, introducing a new bond purchase program worth $120 Billion a month and will continue to do so every month until 2% inflation is reached and lower unemployment is reached.
Apple released their highest revenue figure in the company's history, reporting $111.4 Billion, in which $65.6 billion came from iPhone sales. This was higher than the $59.8 billion analysts expected. Dan Ives praised Apple, stating that "this [was] a masterpiece quarter" for Apple.
Tesla missed earnings for the first time in 10 months. However, it wasn't all bad news, as their quarterly sales were better than expected. They have over 10 Billion in cash through the issuance of Tesla stock. Shares weakened slightly; however they rebounded today.
Be ready for more GameStop in your news feed. However, do not forget about the technical and fundamentals regarding specific currency pairs you are following.
(GME's price at closing was at 190. After hours? $350.)