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Tesla: Temporary downtrend over?

"I always have optimism, but I'm realistic. It was not with the expectation of great success that I started Tesla or SpaceX. It's just that I thought they were important enough to do anyway"- Elon Musk, CEO of Tesla Motors.

Tesla: Temporary downtrend over?

The electric-car maker Tesla (NASDAQ: TSLA) stock is moving sideways in the last couple of days. $TSLA is down more than 15% since the last earnings report and the stock has dropped 30% from its peak in late January. While a after few week’s downsides move the stock finally found a bottom near the $540 area.

One of the major reasons that investors remain excited about the Tesla stock is strong earnings and sales growth, especially for such a large company. Basically, Investors generally should look for stocks that enjoy at least 25% earnings and sales growth on a quarterly and annual basis. As of Q2 2021, Tesla's revenue has grown 38.11% year over year.

The company delivered the fiscal first quarter 2021 results on April end. The company posted earnings of $0.93 per share and revenue of $10.39 billion. Both beat analyst expectations, which were $0.79 EPS and revenue of around $10.29 billion. During the first quarter, Tesla delivered 184,800 vehicles globally, above estimates of 177,822 vehicles.

$TSLA TECHNICAL OUTLOOK

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Technically the overall momentum remains mixed after the stock witnessed sustained downside pressure over the past few weeks. On the downside, the $540 area is going to be a crucial level to watch. However, on the weekly charts, it has reversed from those levels. So, if the stock sustaining above $540 and the momentum picks up there are chances the stock may eventually rise to near the $700 area and a clear break above $700 will open the doors to $750/70. Meanwhile, any break below the $540 level will open the doors to $500/480 levels.

TESLA: 3 ONGOING CHALLENGES

Even though the stock expected to rebound but there are few challenges that Tesla continues to face these days including the semiconductor chip shortage, but Tesla already decided to develop new technology to overcome the chip shortage situation.

  • Tesla’s net orders in China dropped: As we know China is Tesla's second-biggest market after the U.S. In China, Tesla competes with several EV startups including Nio and Xpeng. As per the latest report, Tesla’s monthly net orders in China dropped to about 9,800 in May from more than 18,000 in April.

  • Price of Bitcoin remains under pressure: This week Bitcoin plunged below $32,000 and it is down about more than 45% from its April 52-week high. Tesla purchased $1.5 billion worth of Bitcoin in early February this year.

Sources: Quarterly results - www.teslarati.com, www.reuters.com and $TSLA chart - www.tradingview.com.

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