The Market Dive
Tesla, Inc. TSLA saw a significant decline in share price on Thursday subsequent to the release of its fourth-quarter results, followed by a modest rebound on Friday. With the stock moving into the oversold territory, is it presenting an attractive opportunity at its current levels?
Thursday’s Setback
What Happened: Tesla closed Thursday’s trading session down 12.13% at $182.63, according to Benzinga Pro data. This marked the lowest level since May 25, 2022. On Friday, the stock staged a marginal recovery, closing at $183.25, up 0.34% from the previous day’s close.
Technical Analysis Insights
The 14-day relative strength index of the stock currently indicates oversold levels.
A post on Stocktwits demonstrated that despite the pullback, Tesla’s stock has continued to follow a long-term upward trend line. According to the chart, tracing back to the beginning of 2020, each time the stock has experienced a crash, formed a long-tailed candle, and hit this trend line, it has displayed a resilient bounce back.
A long-tailed candle indicates a rejection of lower prices.
Assessing the Situation
Why It’s Important: Tesla is encountering a near-term slow down without any significant catalysts, though vehicle price adjustments may create occasional ripples. The first-quarter deliveries, expected in early April, or any updates about the company’s next-generation electric vehicle, the timing of the Giga Mexico factory, or an introduction in India, could potentially impact the stock’s trajectory in the near term.
Following the fourth-quarter earnings release, analysts have revised their estimates for the company and lowered their price targets for the stock. Despite the downward adjustments in price targets, the average analysts’ price target of $222.36, based on data compiled by TipRanks, indicates an upward potential of more than 21%.