Tesla Stock News and Forecast: TSLA triples China deliveries

Tesla (TSLA) outperformed on Wednesday as equities staged a slight relief rally following perceived dovish comments from Fed member Lael Brainard. Tesla outperformed as the main indices closed up in the region of 2%. The latest data looks promising but has already been widely rumored so presumably was in the price. 

Tesla stock news

Reuters confirmed what was widely speculated on already – strong delivery numbers from China. Recent headlines have been all about falling delivery times for Tesla models in China. Bears used this as evidence of falling demand, while bulls said no it was due to increased production. Now it has been settled – production has indeed risen sharply. 

"Tesla sold 76,965 Chinese-made vehicles in August, nearly triple its sales from a month ago, as it quickened deliveries after ramping up output at its Shanghai plant," the Reuters article says. "The US carmaker exported 42,463 Model 3s and Model Ys from China last month, the China Passenger Car Association said. In July, it sold 28,217 vehicles and exported 19,756."

Tesla has been increasing production rates and capacities at its Giga Shanghai factory and plans to be able to produce over one million vehicles by the end of the work. We do not have insight as to when this is due for completion. Giga Shanghai currently has a production capacity of about 750k vehicles. 

One of the recent drawbacks for the stock has been continued ETF outflows. Tesla is one of the biggest holdings in index-tracking ETFs and more notoriously in Cathy Woods ARK Innovation ETF (ARKK). We have touched on this in a previous story, but ARKK saw large outflows in August totaling over $800 million. The largest this year. Outflows mean to return cash to the existing holders the fund manager will need to sell underlying shares. Tesla is the biggest holding in ARKK and will naturally fall under pressure as a result.

My short position is a macro view. Tesla is a fantastic product and does have huge growth potential. In the current climate though, it is richly valued and will likely see demand falter as we enter the second half of the year. A strong dollar will also hurt. Tesla has increased its overseas revenue and now accounts for more than half of its total revenues. China amounts to over a quarter. The yuan has been progressively weakening versus the dollar. 

Source: Refinitiv

Tesla stock forecast

The longer-term bearish trend is evident for all to see. The recent rally saw overbought signals on the Relative Strength Index (RSI) and a bearish double top. Now that has played out, and Tesla has retraced to support around the 50-day moving average. Below $314 is the medium-term bearish pivot. Above and it is time to rethink the bearish narrative. 

Tesla (TSLA) daily

For those with a shorter time horizon, intraday or swing trading, we have a nice double bottom at $266. Holding above $280 is the Thursday pivot: above and we can test $296, below and a test of the double bottom at $266 is likely.

Tesla stock, 15-minute

The author is short Tesla stock.