Tesla among top 10 losers. Next what?Tesla is the 7th worst performer YTD in the Nasdaq-100. It is the 11th worst performer in the S&P 500. The stock stands 28% lower.
Still, after reaching its lowest level on 22/April, the stock has rallied a remarkable 30%. On 24/April, the stock rallied 12% after the positive earnings call. On 29/April, the stock jumped another 15% after the announcement of the Baidu ( HKEX:9888 ) partnership.
Yet in the longer term, outlook remains cloudy as margin compression owing to fierce competition from Chinese EV makers and the wider EV industry slowdown.
MUSK'S CHINA VISIT LEADS TO BAIDU DEAL
Last Sunday, Elon Musk flew to China on a surprise visit. The last minute visit led to speculation over a push to launch full self driving (FSD) in China.
Persons close to the matter stated that Musk was expected to discuss the rollout of FSD software and permission to transfer data overseas, as reported in Reuters .
One of the key hold-ups for the rollout of FSD in China has been access to map data. Musk’s recent trip seems to have addressed that as Tesla announced a partnership with Baidu for map data access. While, Musk has long claimed that Teslas will be able to run FSD without map data, this will allow them to roll-out the offering much sooner and boost the slowing revenue in one of their leading markets in China.
FSD has been a recent revenue driver for Tesla. In 2024, Siena Capital analysts estimated that Tesla recognized almost USD 700 million in revenue, which represents 4.3% of their automotive revenue after stripping regulatory credits.
BYD PARTNERSHIP
Another strategic partnership that has helped boost investor sentiment at Tesla has been the strategic partnership with BYD ( HKEX:1211 ).
While both companies are major competitors, BYD recently overtook Tesla as the largest EV manufacturer in terms of overall vehicle sales (including hybrids). However, the fierce competition has also taken a toll on both companies as it has led to price cuts to win over more customers.
That’s why a technology-sharing partnership between the two companies is positive. While, they continue to compete, the partnership – specifically related to the use of BYD’s LFP battery technology in certain low-cost Tesla models – remains a positive for Tesla as it allows them to diversify their battery supply chain, reduce production costs, and enhance range for their lower-cost models.
LOW-COST MODELS COMING SOONER THAN EXPECTED
A recent hurdle for Tesla has been delay behind the upcoming low-cost Model 2 vehicle which plays a pivotal role in Tesla’s growth strategy. According to a Reuters report , Tesla had opted to cancel or indefinitely postpone plans for the upcoming Model 2. Instead, it would focus its attention on Robo-Taxis. The low-cost car represented the next phase of Musk’s long-term master plan to produce affordable electric vehicles through manufacturing process improvements.
Fears were that fierce competition in the low-cost category by Chinese manufacturers would make Tesla’s efforts unfeasible.
Yet, Elon Musk disputed the Reuters report and at the Q1 earnings investor call, it was verified. The Model 2 strategy is still on track. In fact, it may come sooner than expected at the end of 2024. Musk stated that Tesla was accelerating the launch of more affordable models that will be available to produce on its existing manufacturing lines.
Tesla aims to fully utilize its current production capacity towards these efforts and grow manufacturing 50% over 2023 before they start investing in new manufacturing lines.
Additionally, the robo-taxi push is also underway. Elon Musk stated that Tesla will launch its long-awaited robo-taxi product as soon as 8/August/2024. The autonomous driving robo-taxis will earn revenue for their owners. Moreover, owners will be able to add their Tesla's to the robo-taxi shared fleet with just one click on the Tesla app.
BEARISH CLOUDS PERSIST
Despite these recent developments, the outlook for Tesla remains undeniably cloudy. At its Q1 earnings, Tesla reported dismal results. But it’s not just Tesla which is struggling, it’s the wider EV industry.
EARNINGS SUMMARY
Tesla's Q1 2024 earnings report released on 23/April revealed a challenging quarter marked by margin compression and a slowdown in electric vehicle (EV) sales, influenced by strategic price cuts and broader economic factors.
Financially, Tesla reported a reduction in its automotive gross margin to 17.4%, down from previous quarter, reflecting the impact of significant price reductions across its model lineup intended to stimulate demand amid a softening global market.
These price adjustments, while successful in driving a short-term uptick in sales volumes, did not fully counterbalance the revenue per unit loss, leading to an overall revenue of $21.3 billion and earnings per share (EPS) of $0.45, both figures below analyst expectations. Quarterly revenue and deliveries were the lowest since 2022.
One of the bright spots has been Tesla’s efforts to control costs. Not only did the company recently announce layoffs. It also stated that it would slow the growth of its Supercharger network to bring costs under control.
Moreover, investors were not as concerned about the concerning financials following the investor call where Musk re-affirmed Tesla’s long-term strategy while maintaining that Tesla would remain lean by producing the new lineup on existing manufacturing lines, assuaging fears of spiraling costs.
Critical to note that it is not just Tesla which struggled in Q1. BYD also reported that its profits fell 47% YoY. Vehicle sales also slowed QoQ. It is the wider industry that is experiencing a slowdown.
Unfortunately for Tesla, margin compression is more concerning for it compared to its Chinese competitors. Particularly as Chinese manufacturers are able to keep costs lower with help from government subsidies. Not only does the Chinese government offer direct subsidies to manufacturers, it also offers subsidies for EV buyers in China which has led to a boom in EV sales, which has benefited Chinese EV manufacturers.
Economic slowdown from high interest rates and a domestic slowdown in China may keep EV sales subdued for some time. In which case, Tesla would be forced to continue with its price cuts which would continue to pressure margins.
TESLA'S FINANCES STRAINED UNTIL AFFORDABLE MODEL LAUNCH
With recent positive news, Tesla stock has recovered sharply. Yet, it remains one of the worst performing stocks in the S&P 500 YTD.
Bearish clouds persist for Tesla as margin compression continues due to competitive price cuts by Tesla. Amid an industry-wide sales slowdown, Tesla may be forced to continue with its strategy to offer price discounts on its cars, keeping its margins pressured. Moreover, Tesla continues to face pressure from low-cost Chinese EVs until it can launch its own low cost models.
While, Tesla’s new models are expected sooner than expected, they are still several quarters away. In the meantime, fundamental factors are likely to continue impacting Tesla’s profitability and subsequently its stock.
EV
TESLA Has Elon made his miracle again? 4 month Resistance brokenNews quickly broke out that Tesla (TSLA) has received tentative approval from Beijing to launch its driver assistance software in China. This development occurred during a surprise visit by CEO Elon Musk to Tesla's largest market outside the US. Chinese authorities have agreed to allow Tesla to introduce its Full Self Driving (FSD) solution, leveraging mapping and navigation technology from Baidu (BIDU), the Chinese tech giant. This has so far pushed Tesla's shares more than +7.00% premarket.
Just 2 weeks ago (April 15, see chart below), while TSLA's price was at $166, we made a case why a potential 1D MA50 (blue trend-line) bullish break-out after laying off more than 10% of its staff, could be its 'META moment', just like the social media giant did in November 2022 and bottomed:
Of course each case has its differences but as we can see, Tesla did make a similar bottom on April 22 and will most likely open above the 1D MA50 today for the first time in almost 4 months (since January 08 2024)!
That is a major bullish break-out for at least the medium-term as each time the stock did that in 2023, it didn't stop there and rather went for a Lower High on the dotted trend-line. Technically it should make contact with as least the 1D MA200 (orange trend-line), in order to allow the market given the fundamentals at the time to decide upon the longer term trend.
As you can see, there is a huge Bullish Divergence on the 1D RSI, which has been trading within a Channel Up against the price's Channel Down since late January. As a result we set a minimum $210.00 Target on a 6-week horizon and then we will re-evaluate the longer term on the 1W time-frame.
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TSLA Tesla Options Ahead of Earnings If you haven`t bought the dip on TSLA:
nor sold the regional top:
Then analyzing the options chain and the chart patterns of TSLA Tesla prior to the earnings report this week,
I would consider purchasing the 140usd strike price Puts with
an expiration date of 2025-1-17,
for a premium of approximately $20.40.
If these options prove to be profitable prior to the earnings release, I would sell at least half of them.
RIVIAN Last bounce before the bottom. Be ready to buy.Rivian Automotive (RIVN) has been trading within a Channel Down pattern since the September 15 2022 High. The price action has been below the 1D MA50 (blue trend-line) for more than 3 months (January 11) and with such aggressive selling, the price is approaching the bottom of the pattern.
With the 1D RSI on Higher Lows (Bullish Divergence) we expect a dead-cat-bounce towards the 1D MA50 on the 0.236 Fibonacci Channel level and then structure bottom around 7.80. That will be the time to go heavy on buys and target $17.00 (Fibonacci 0.618, which is where the last Lower High was priced at).
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NIO SHORT to $5.70, then $4.0 NIO - Chinese automaker
Fundamental
According to carnewschina.com in Q1 2023 year NIO sold 31,041 EVs - 2.46% only.
"Nio is currently having difficult times in China. Because of the price war, its sales declined, resulting in a noticeable revenue decrease. So, Nio was forced to also join the price war by cutting the cost of every model by 30,000 yuan (4,200 USD). They are obviously in need of keeping the customers’ demand high. The newly launched ET5 Touring can help them for a short period. But station wagons don’t sell hot in China. So, Nio has to push its international deliveries to start as soon as possible."
read NIO to hit the Europe soon. - I can't believe it. European market is not empty. Volkswagen, BMW, Tesla, Toyota, Honda, Hyundai and many others sell a lot right now. Top EU Electric Cars
I watched a lot of presentations, reviews. Nio EV's are really good. But the prices..
Y/Y
Gross Margin % 7.73
Operating Margin % -37.06
Net Margin % -35.01
Income -2463.40M
Sales 7.03B
Cash is melting, debt is growing.
Technical
NIO's chart goes down in the channel.
Just now price is
- near the top level of downtrend channel - Resistance $10.5
- RSI 23 is 63% (bounced from 70%). Always when RSI is on this level the price falls 30% min.
- next strong support level is $5.70
Conclusion
NIO chart is going down in the channel.
Buy for $5.70, then $4.0 and keep for 2-3 years.
TESLA Is this a W-shaped recovery?Tesla (TSLA) held Support 1 (160.50) last Friday, in fact it touched it and rebounded immediately making a technical Double Bottom formation. Yesterday it broke and closed above the 4H MA50 (blue trend-line) for the first time since March 04, providing s serious bullish continuation signal.
The most important development however, is that this Double Bottom has strong probabilities of giving a W-shaped recovery pattern. A break above the 1D MA50 (red trend-line) will technically confirm that, as it will be the first time above it in 3 months (since January 09).
We can already see the 4H RSI on Higher Lows, i.e. a Bullish Divergence, which favors these probabilities. Our short-term Target is 205.00 (marginally below Resistance 2).
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Is The EV Hype Over? How The Fed Is Destroying TeslaThe first quarter of 2024 is now over, closing in a record +10% YTD rally and an exceptional +43% YOY increase in the QQQ. Despite the markets pushing higher, Tesla is experiencing significant challenges, with a -30% decrease YTD and a -9% decline YOY. This performance has positioned Tesla as the worst performing megacap so far. Given these circumstances, it's essential to delve into both macroeconomic factors and technical analysis to understand what has happened and what is likely to happen moving forward.
The Macroeconomic Impact on Tesla
Two years ago, the Federal Reserve initiated a historic rate-hiking cycle, increasing interest rates from 0% to 5.5% within just over a year and maintaining this rate since July 2023. This shift in monetary policy has notably affected car financing rates, now at 8.2% for a five-year loan, which significantly discourages consumers from buying new vehicles, especially EVs.
The chart clearly illustrates an inverse correlation between Tesla stock and interest rates. Moreover, Tesla has operated exclusively during periods of historically low interest rates. Despite the Federal Reserve pausing rate hikes nine months ago, the interest rate on car loans continues to rise. Further examination of inflation trends indicates that most common inflation measures have either plateaued or slowed their pace of deceleration, at a level inconsistent with the Fed's 2% inflation target.
The M2 money supply and inflation expectations are critical indicators for predicting the direction of inflation. The peak in the headline Consumer Price Index (CPI) followed the peak in M2 YOY by 16 months, recently bottoming just three months before CPI YOY stopped making progress to the downside. This lagged correlation suggests that headline CPI is unlikely to continue its strong downward trend moving forward.
Moreover, inflation expectations, which remain well anchored, have also appeared to stop making progress to the downside, all remaining above 2%. This, combined with unchanged interest rates for nine months, suggests that the neutral rate of interest must be significantly higher than the pre-COVID trend.
Historically, recessions have played a key role in helping the Fed bring down inflation to their 2% target. However, current economic indicators, including low unemployment levels and easy financial conditions, suggest that a recession is unlikely in the near future, despite the fed funds rate staying unchanged at a two-decade high.
The Chicago Fed National Financial Conditions Index (NFCI) captures the stimulative effects on the economy from the U.S. government's expansive fiscal policy. By borrowing and spending trillions directly from the Reverse Repo (RRP), the U.S. government has ingeniously counterbalanced the constrictive effects of tighter monetary policy without exerting upward pressure on long-term yields.
The prolonged inversion of the yield curve, significantly extended by the U.S. government's financial strategies, could mark this cycle as having the longest inversion in history. Typically, a steepening yield curve is a precursor to higher unemployment and economic recession. However, the steepening of the yield curve remains unlikely in the short term, with excess reserves still available in the RRP and the Treasury General Account (TGA).
With the U.S. employment sector still robust, showing historically low unemployment levels and low initial and continued claims, the likelihood of a significant uptrend in the unemployment rate seems low, as job openings are absorbing most of the excess labor supply and still remain well above the historical trend.
This suggests that the fed funds rate may remain at around 5% this year, maintaining car loan rates at a higher level for an extended period and consequently making EVs increasingly less affordable for the average consumer. This scenario is likely to lead to a continuation of price cuts and greater margin contractions.
Tesla's Technical Analysis Outlook
From a technical analysis perspective, Tesla stock faced rejection at the $205 horizontal resistance line and might be rejected from the $180 level, marked by the 0.236 Fibonacci level. The next significant support level is at $155, with a possibility of revisiting the January 2023 low of $110, given Tesla's stock has been in a downward trend ever since November 2021.
From a trend-based perspective, we can clearly see that TSLA stock is in a strong downtrend both in the 4H and daily timeframe with the EMAs and 20- week SMA trending lower.
Despite this unfavourable outlook, caution is advised when considering short positions in Tesla due to its market dominance and relatively stable financial position, making it a riskier target than other less financially secure EV manufacturers.
Concluding Thoughts
While the broader market demonstrates resilience, the Federal Reserve's monetary policy is significantly shaping the EVs industry future. With the economy likely transitioning away from historically low interest rates into a higher interest rate environment, caution is advised. Investors may benefit from considering less interest-rate-sensitive options until a clearer picture of the inflationary landscape and its impact on the economy emerges.
Disclaimer: This article is for informational and educational purposes only and should not be construed as investment advice.
NKLA - Watch at or below 50 centsNKLA - Nikola is approaching the 50 Cents mark. A brief opportunity in a period of price weakness? Growth and loss become exponential at this point. A move from .50 to 1.00 would be a 100% increase in price. A move from .50 to .25 would be a 50% loss. Are prices below .50 optimal prices for scalpers or swing traders? Or, is it time to build a less expensive position trade?
TESLA Can it break the 1D MA50 and sustain an uptrend?Tesla has been trading within a Bearish Megaphone pattern since the July 19 2023 High. The recent Low (March 14 2024) came very close to the 152.50 Support, which is the April 27 2023 Low. This shows just how strong the current bearish structure is.
Medium-term traders/ investors can expect a sustainable uptrend only when the 1D MA50 (blue trend-line) breaks, which has been the Resistance all this time since January 09 2024 (almost 3 months). If it does break above it, we expect a +41.50% rise from the bottom (+5% more than the previous Bullish Leg), targeting $225.00. That is considered conservative based on the margins of the Bearish Megaphone as the previous two Lower Highs were priced on the 0.786 Fibonacci retracement level.
The fact that the 1D MACD has already formed a Bullish Cross below the 0.00 level, favors statistically the upside case, as in the past 12 months such a signal failed to break above the 1D MA50 only once out of 4 times in total.
Until it does break it though, the trend remains bearish short-term towards Support 1 (152.50).
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Institutional purchase at $165 : I hope I'm not mistaken.I bought earlier because I couldn't manage my emotions hahaha. Since it was at 210 or 215, I had placed my orders at $165, but I couldn't resist FOMO during the drop lol.
Earnings are forecast to grow 10.62% per year
Earnings grew by 19.2% over the past year
NIO - What now after loss?NIO hit the first TP of our trade set up and then violently reversed. We had a SL at 6.99 that got triggered and we took a loss for the rest of the position.
Although we took a loss, we can see how well our levels were respected, and why a SL at 6.99 was key. As soon as we fell below 6.99 we proceeded to fall another +10%, and now we sit at 6.34.
There is no trade set up as of yet, nothing in terms of the technical analysis we preach is suggesting we might reverse. However, this is an idea:
I KNOW IT'S NOT A FORMAL HARMONIC. But the fib extensions line up perfectly and 5.8-5.6$ is a massive area of support - as shown below:
So our plan is to wait and see what we do, it is possible that we spring back above $7, if that happens we will reassess and potentially open a trade there. The more likely event is that we move around between 6-7 dollars for a bit before reaching our 5.8-5.6 pocket where we could react at the 1.618 extension and bounce to $7 which is already a 22% move and a potential entry.
Stay tuned as another opportunity will arise, but it could take a while. BABA is an identical example where we fell below 78 (our stop loss) headed to 70, then back to 78 and now at 69. We stated that we would reconsider if we spring back above 78 (failed) or reach the 60 support (on the way).
It's not been the best of markets so far but we will be ready for the next opportunity with an strong mindset.
NIO BACK TO 10 BY 2025 !!NIO’s stock has potential for growth in the coming years due to several factors:
Analyst Predictions: The 8 analysts with 12-month price forecasts for NIO Inc. stock have an average target of 11.31, predicting an increase of 95.67% from the current stock price1.
Earnings and Revenue Growth: NIO is forecasted to grow earnings and revenue by 55.5% and 22.4% per annum respectively2.
Competitive Positioning: NIO is a significant player in the electric vehicle market, which is expected to grow rapidly in the coming years. It has been able to position itself as a strong competitor, even causing disruptions for established players like Tesla
TESLA can start a new rally to $300Last time we looked at Tesla (TSLA) was two weeks ago (February 15, see chart below) when we called for the bottom of the Channel Down pattern on a standard Inverse Head and Shoulders (IH&S) pattern:
This time we switch to the longer term 1W time-frame where the stock is making a rounded bottom below the 1W MA200 (orange trend-line) on the 6-month Lower Lows trend-line. The last time we saw a rounded bottom like this was during the December 2022 global market bottom. In fact, the sequence from Tesla's ATH to that bottom is quite similar to the price action from the July 2023 High to now.
A common dynamic on both patterns is the ATH Lower Highs trend-line, which has 4 rejections so far. Since however the stock made a +112.48% rise on the 2022 bottom and then on the next bullish leg a +94.91%, we expect it to initiate a new such rally of +75% (if each rally is weaker by 20%) and target the July 17 2023 Resistance. As a result we have a medium-term Target of $300.
Notice also how symmetrical the 1W RSI sequences between the two are. Right now we are below the Support level which in 2022 priced the bottom.
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NKLA Nikola Corp Nikola Corporation Reports Earnings Results for the Full Year Ended December 31, 2023
February 22, 2024 at 09:01 am EST
Share
Nikola Corporation reported earnings results for the full year ended December 31, 2023. For the full year, the company reported revenue was USD 35.84 million compared to USD 49.73 million a year ago. Net loss was USD 966.28 million compared to USD 784.24 million a year ago.
Basic loss per share from continuing operations was USD 1.08 compared to USD 1.67 a year ago. Basic loss per share was USD 1.21 compared to USD 1.78 a year ago. Diluted loss per share was USD 1.21 compared to USD 1.78 a year ago.
IS THE AUTO INDUSTRY ABOUT TO CRASH? FORD TRENDS Uh, okay, so I have zero clue what is going to happen and I didn't see this until now, but if I was trading per my style, I'd be loaded up on puts where I circled. I WOULD THEN ABOSLUTELY LOAD THE BOAT on the retouch. Potentially down to $8 and then probably calls for a short term bounce, which would have me realizing profits quickly in order to keep risk down. I would then be waiting for the next signal.
It's getting so close to crash time per multiple indicators, potentially, according to short term trend alignment which is far from an exact science, however, it shows a small pump of pretty much up to maybe $11, but wow! There is a LOT of downside showing.
Any thoughts on this?
The crash projections say Late Feb/Early March
But this market is moving faster every day, which is outpacing a lot of older traders that aren't able to adapt.
I mean, there is no question it bounces back, but.. how long, and how much, and how fast?
I think there is room to return to nearly $20.
In other words, if it's March, and the price is at 3.83, and you are hearing doom and gloom on the news. BUY CALLS. I wouldn't cover shares, I think the pace will be quite fast on the return for a lot of these stocks.
All in all, if you're still with me, the whole point I'm trying to make is this next crash is a trap, leading into a pump, which will cause "THE BIG ONE"
Trends point to next year early, but the market is fast, and you need to reanalyze in real time, meaning, it could literally happen in the next few weeks. I don't know, you don't know. We can't predict the future of stock prices, but we can use the information we see to swing the statistics in our favor for a successful trade, even if that means being patient and waiting for the right entry.
NIO, TEST DUMMIES NEEDED, BUY THE DIP OR LET CRASH?I like the Chinese stocks
Nio is one of them
There is some downside showing still as far as I can tell
It is leading to an old support trend, however, I don't know if that is relevant anymore.
I like the potential of buy the dip under $5.4
Subject to change quickly.
but right now, bullish on the next decent dip.
Drawn in line is what I'm currently seeing as an ideal scenario, do not follow line, instead follow trends and price targets. Line is often inaccurate, but helps me reanalyze my indicators.
The lowest number I could see was around 2.8 or 2.9. unlikely, but you never know, completely possible.
After 14.9, it can go higher, but a new chart will be needed, and will likely be needed before that point arrives.
RIVIAN Low risk buy opportunity at least on the short-term.Rivian Automotive (RIVN) hit the $21.00 Target following our November 29 2023 (see chart below) buy call but even though it confidently broke above the Bearish Megaphone, the price corrected aggressively back even below the Higher Lows Zone:
The price is at the moment coming off an oversold 1D RSI Double Bottom, naturally below both the 1D MA50 (blue trend-line) and 1D MA200 (orange trend-line). Even though the long-term pattern remains a Channel Up (blue), we have to consider the possibility of the (dashed) Channel Down breaking below it and establishing a new long-term trend. Until that happens, this is a short-term buy opportunity, with our Target being $23.00, right at the top of the Channel Down, on the (dotted) median of the Channel Up, representing a +62.17% rise from the Channel's bottom, similar to the December 26 2023 Lower High (peak).
If then we get a 1W candle closing above the 1W MA100 (yellow trend-line), which will be the stock's first time to do so, we will buy the bullish break-out and pursue our long-term Target of $35.50, which will represent a +142.79% rise from the bottom, similar to the last Bullish Leg of the long-term Channel Up that peaked on July 27 2023.
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