Tesla stock split could not stop TSLA falling 6% on Friday

Tesla stock fell on Friday as commentary from Elon Musk was taken as relatively bearish. The Tesla CEO said that the US looked set for a mild recession, probably in the ballpark of 18 months. Also more noteworthy in our view, Tesla stock is up nearly 32% in the past month and was due for a stall. Regular readers will have noted that your author has been short Tesla for some time. Luckily, I saw the writing on the wall and closed the position some 25% ago in the infancy of the rally.

Also read: Tesla Stock Deep Dive: Price target at $400 on China headwinds, margin compression, lower deliveries

Now it may be time to review the short thesis. This equity rally has been long in duration and percentage now and may be set to stall. The catalyst for the rally, that of falling yields, is reversing after Friday's strong jobs report. That strong report has given the Fed more ammunition to go for 75 basis points again in September. We are likely to see rhetoric turn notably hawkish this week from Fed speakers. 

Tesla stock news

Also of note were other somewhat bearish comments from Elon Musk about the long-awaited Tesla Cybertruck. “Cybertruck pricing, it was unveiled in 2019, and the reservation was $99," Musk said. "A lot has changed since then, so the specs and the pricing will be different.”

One has to assume this is a warning that prices will be higher given inflation and supply chain issues, but perhaps the biggest news piece is the imminent Tesla stock split. This is due to take place after August 17, which will be the record date. The Tesla stock split is to be a 3-for-1, so that Tesla shareholders on August 17 will receive an additional two extra shares in the form of a special dividend. Trading on a stock split-adjusted basis is scheduled to begin on August 25. Stock splits are generally seen as beneficial to stock prices simply due to human psychology – we like things that are perceived as cheaper even if in reality they are not. 

Tesla stock forecast

Tesla recently marked its monthly gain of over 30% by flashing overbought on both the Relative Strength Index (RSI) and the Money Flow Index (MFI). It also retraced to the 200-day moving average but has not consolidated above there.

The $945-to-$975 zone was an area of major resistance, and TSLA stock price has failed here. Momentum looks to be stalling, and Tesla is nothing if not a momentum play. This week could be interesting with Wednesday's CPI. That will dictate yields and the next Fed move, both of which will be the dominant factors in the next move for Tesla stock. 

Tesla chart, daily