On Friday, the S&P 500 and the NASDAQ 100 both hit new all-time high prices. Stocks like NVIDIA (NASDAQ: NVDA) and Meta Platforms (NASDAQ: META) continue to lead the market higher. The Magnificient 7 is holding up the indexes, with one notable exception: Tesla (NASDAQ: TSLA). What was once the most popular stock on the market has turned into the whipping boy for shareholders. The stock has finished all but 3 days in 2024 in the red, and despite indexes trading at all-time highs, Tesla is down by more than 14% so far this year.
Everyone and their dog are drawing technical charts for Tesla’s stock. Some of them are bullish and a lot of them are bearish. Remember that you can make any stock chart look bullish or bearish depending on the indicators and timeframe you use. For now, I wouldn’t be too worried about Tesla’s technicals because the fundamentals are looking much worse. With Tesla’s earnings coming next week, it’s time to look at why the stock has struggled and what we can expect moving forward.
Tesla Earnings: Will They Matter?
Tesla’s stock has historically run higher into its earnings call. So far, this hasn’t been the case in 2024 and it could be because the past two earnings reports haven’t been impressive at all. This week, we were hit with some more bad news for the company. First, more price cuts are expected in China and the United States. Then, it was reported that Hertz is selling its fleet of Tesla Model 3s and is shifting back to ICE vehicles. On Friday, early reports from Cybertruck drivers indicated that the actual range for the new model is only about 150 miles which is much less than the advertised range.
One particularly bearish piece of news came from long-time Tesla bull Adam Jonas of Morgan Stanley. Jonas pointed out that global adoption of electric vehicles has waned as demand slows and the transition away from ICE vehicles has gone slower than expected. Coming from Jonas, this is as bearish as he’s ever been on Tesla. This also explains why stocks for companies like Rivian (NASDAQ: RIVN) have also been punished lately.
Then there was the very public demand from CEO Elon Musk for a higher share of the company. Musk stated that if he does not get 25% ownership of Tesla, he’ll take the AI and robotics work externally to another company. Musk reiterated that this isn’t about money or shares, it is about voting weight on the Board of Directors. Musk says that with his low ownership of the company, he can easily be outvoted and even taken over by a hostile entity.
So what do I expect from Tesla? The stock is currently trading below its 8, 20, 50, and 200-day moving averages which is never a good sign. Bearish pressure continues to push the stock price down and disappointing earnings could push this well below $200. For now, it’s a wait-and-see for me. If it drops below $200 and down to the $150 area, I’ll definitely consider buying a position. Tesla needs some good news though and it’s hard to get optimistic about the earnings report given the current state of the company.