Tesla Stock Price and Forecast: TSLA breaks below 200-day moving average at Friday open

Tesla stock dumps 11% by the close on Thursday.
TSLA beat on earnings, but the stock reacted poorly.
Tesla now approaching key support at the 200-day moving average.

Ivan Brian FXStreet

UPDATE: Tesla shares fell 2.9% to $805 15 minutes after the open on Friday. This places the stock below the always significant 200-day moving average at $814, which could make $730 the new downside target. This comes a day after the EV leader plunged 11%. All three major indices are down, and the tech-heavy NASDAQ has lost 0.3%.

Tesla (TSLA) shares dumped heavily on Thursday as investors reacted poorly to the latest set of earnings. Tesla closed a huge 11.55% lower at $829.10 in what was one of the heaviest daily losses suffered since Elon Musk announced his share sale plan on Twitter. TSLA is a high beta stock, meaning it offers high volatility, but even this reaction to what was actually an earnings beat surprised most. Of course, Tesla stock is caught in the crosshairs of sellers as rotation out of growth names continues.

Tesla Stock News

The headline grabbing numbers were good from the earnings release. Earnings per share (EPS) came in ahead of estimates at $2.54 versus $2.26. Revenue also beat, coming in at $17.72 billion versus a $16.35 billion estimate. However, Tesla said in its earnings statement that its factories were not running at full capacity due to supply issues. The company said it hoped to have the factories back to full capacity as quickly as possible, but investors took the news badly.

With a more modest valuation, this probably would not have resulted in a near 12% fall, but TSLA trades on an extremely high multiple and so was targeted before these results. This news just gave sellers a further excuse to de-risk and reduce exposure to Tesla. Of course, mentioning supply chain issues was bad enough, but the company saying these issues could last into 2022 was a further factor behind the sharp fall.

The sell-off had contagion effects for other names in the electric vehicle space who are even more high growth and at earlier developmental stages. Lucid (LCID) has collapsed to $28.70, a loss of 15% alone on Thursday, and is now down 25% for 2022. Rivian (RIVN) crashed lower by 11% and is now down a huge 48% year to date in 2022.

Tesla Stock Forecast

Tesla approached key support from the 200-day moving average at $814. This is a key level for all stocks, and Tesla has not been below it since August of last year. A break and it is on to $730 as the next major support. $685 is the point of control and a huge volume profile support.

If Tesla can recover, the stock should head to $945 as the first target, where the 9-day moving average. However, more selling is likely. Tesla has created a lower low than the previous $886 mark and so has confirmed the downtrend.

Tesla (TSLA) chart, daily

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Author

Ivan Brian

FXStreet

Ivan Brian started his career with AIB Bank in corporate finance and then worked for seven years at Baxter. He started as a macro analyst before becoming Head of Research and then CFO.

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