I suspected we would see a ‘sell the fact’ trade in Tesla shares yesterday following Q3 deliver data and we got a nearly 10% drop from the pre-market highs. That ultimately splashed a bearish outside reversal on the chart, pointing to further declines.
Today the bulls tried to steady the stock and it opened 1.5% higher but that’s quickly come undone and shares are at a session low, down 4.4%.
TSLA daily
Tesla shares are still materially higher from the September breakout but the aggressive selling this week points to a deeper correction. I highlighted $400-$410 as a target for sellers yesterday and that’s a spot that buyers may also wish to wade in.
The decline in Tesla today coincides with some selling in the Nasdaq, which had also opened higher. The next leg of the move will likely correspond with the broader market. One risk I see is a more-hawkish Fed, though with the US government shutdown it’s tough to see a pivot any time soon.
The drop in Tesla shares came despite an upgrade last week to a street-high $600 from Wedbush’s Dan Ives. Deutsche Bank had also boosted its target to $435 from $345 ahead of quarterly delivery numbers.
A notable bear is UBS, which has a sell rating on Tesla and stuck with it noting that Q3 sales were pulled forward because of a EV tax credit for $7000 that expired on Sept 30. UBS has a target of $215.
The drop in Tesla shares is adding to some sudden Nasdaq weakness, with the index now down 0.7%.
