- Tesla shares drop in Tuesday's session to close 2% lower.
- TSLA still looking for direction after solid earnings.
- Tesla has had some concerns with China previously.
Tesla stock closed nearly 2% lower on Tuesday despite posting strong earnings after the close on Monday. Earnings were strong with a beat on the top and bottom lines. Adjusted earnings per share (EPS) came in at $1.45 versus the estimate from Wall Street analysts for $0.96. Sales came in at $11.96 billion, also beating the $11.21 billion estimate. Delivery numbers were also high on investors' minds, and these too were ahead of estimates. Tesla delivered 201,304 vehicles in Q2 2021 an increase of 121% over the same period last year. Tesla said its average selling price had declined by 2% over the year, but its gross margin increased three percentage points from 25.4% to 28.4%. Tesla stock popped just after the release of results, but the regular session on Tuesday was not so kind with Tesla stock closing at $644.78 for a loss of 2%.
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Tesla key statistics
| Market Cap | $621 billion |
| Price/Earnings | 658 |
| Price/Sales | 22 |
| Price/Book | 28 |
| Enterprise Value | $753 billion |
| Gross Margin | 21% |
| Net Margin |
3% |
| Average Wall Street Rating and Price Target | Hold, $671 |
Tesla stock forecast
Our view on Tuesday before the market: "The move in the main session will be most watched as this is when the big hedge and fund managers will show their hand. The reaction is key. This is pretty good news, so a negative reaction will be telling, while a continued positive reaction will bring levels around $700 and $715 into view."
We got a negative reaction, which is never a good sign after good news. There are some extenuating circumstances though as the China debacle spread to many Chinese EV names, and Tesla may have been caught in the crossfire. Tesla has had some concerns with China already and had moved to address them. The stock suffered in the last Chinese sell-off after DIDI, so this may be a similar issue.
Regardless, TSLA has again retreated to its old friend, the 200-day moving average. Tesla stock has been treading this line repeatedly since May. This is also the bottom of the channel in place since May, making it a strong support zone. The volume profile backs this support argument up further.
The key levels remain $591 and $715, breaking either should see an acceleration due to a lack of volume. Breaking $591 should see $539 quickly targetted. While breaking $700 is probably the key to $715 and then $780 being tested.
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