Tesla tanks in ‘transit’ trouble

Another Elon Musk Tweet is coming back to haunt him, but that could be the least of the company’s troubles

Another Elon Musk Tweet is coming back to haunt him, but that could be the least of the company’s troubles this year


The SEC began contempt proceedings against Musk for violating a settlement that originated from his infamous “funding secured” tweet. With a huge Tesla production drop in the first quarter, the regulator now has more ammo. Tesla cranked out 77,100 cars and delivered 63,000, down 11% and 30% respectively, with 10,600 vehicles “in transit” at quarter end. To hit 500,000, Tesla needs to boost production to 11,000 a week, versus its peak 7,000.

Missed production targets also play havoc with Tesla’s shaky finances as demand flags. Model 3 production was flat, reflecting reduced U.S. tax breaks. Luxury Tesla shipments were down by half. Q1 net income will “be negatively impacted” Tesla said, though it has “sufficient cash on hand”. It’s Q1 earnings are due on 19th April. Either way, consensus for a cash-positive year has to come down.

As such, sellers have targeted the year’s $254.65 low again, looking for 2018’s $244.9 floor. TSLA broke its Thursday fall above both, bouncing at $260.58. It is beginning to fill a gap up to Wednesday’s $297.80 close. Filled orders could see the gap close. But the clearest pattern on TSLA’s chart is a clean falling wedge. If price gets back above its 21-day exponential moving average, last at $280.9, it will still face falling trendline resistance around $290. 220-day MA is at $313. A trip to support may be needed first before sustained upside.


Tesla CFD – daily [04/04/2019 20:21:46]

Source: City Index

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.